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How to Fund Roads and Ensure Electric Vehicles Pay Their Share

A Mileage Fee, Gas Tax or Both?

by Stephen Kulieke | Jan 4, 2019

Since electric vehicles use no gasoline, their drivers pay no gasoline tax. And as more people drive EVs, gas-tax revenue for road repairs is dwindling. So how can California and the rest of the country avoid road-funding shortfalls and ensure that EV drivers pay their share of needed repairs?

A research report submitted to the California Legislature this week by the University of California, Davis’ Institute of Transportation Studies proposes an innovative solution: Switch EVs to a mileage fee while continuing to have gasoline-powered cars pay gasoline taxes.

Gas tax or mileage fee?

Our study finds that a per-mile road charge, designed specifically for zero-emission vehicles, is a relatively low-cost and sustainable solution to funding our roads.
– Alan Jenn

Many states, including California, have opted for the easy way out — charging an extra registration fee for electric vehicles. But that is not a sustainable or effective solution, according to report author Alan Jenn, a UC Davis research scientist with the Plug-In Hybrid & Electric Vehicle Research Center.  

“The California zero-emissions vehicle registration fee doesn’t support the long-run funding of transportation infrastructure, nor is it equitable for drivers of electric and hydrogen vehicles,” said Jenn.

Others argue that the gas tax must be replaced by a mileage-based fee as soon as possible to avert increasing shortfalls in road funding. But switching from the gas tax to a mileage fee would be technically and administratively difficult.

“California now has the opportunity to support alternative funding mechanisms,” Jenn said. “Our study finds that a per-mile road charge, designed specifically for zero-emission vehicles, is a relatively low-cost and sustainable solution to funding our roads.” 

The proposed transition is expected to cost less, be easier to administer and provide a smooth transition away from gas taxes. The report concluded that a mileage-based user charge would be the easiest and least costly way of addressing the long-term decline of gas taxes.

The report, “Assessing Alternatives to California’s Electric Vehicle Registration Fee,” was requested by the California Legislature.

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