How Much Does NJ Per-Mile Tax Bill Affect Plug-In Cars?

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It was always going to happen: Several states around the U.S. have realized they can charge electric car owners a tax to make up for the fact they don't pay any gas tax.

Unfortunately, several states have also lumbered electric cars with an unfairly high tax--but is New Jersey's proposed per-mile tax rate another of those punitive charges, or more fair than it seems?

In our experience, many electric vehicle owners don't actually mind paying a little tax to use their vehicles--after all, it pays for road maintenance and upkeep, and ultimately the roads benefit everyone in one way or another.

Michigan, Washington, Oregon, Virginia, Arizona and Texas have all recently proposed or instated electric car taxes, some more fair than others. Fixed fees, mileage charges and other means have all been used to recoup a little of the money lost from electric drivers not paying tax on liquid fuel.

The bill, number S2531 proposed by Democratic Sen. James Whelan of Atlantic City, NJ, uses a per-mile charge of 0.00839 cents. That sounds miniscule, but for the average driver doing 12,000 miles per year, it equates to $100.68 in tax.

The state's current gas tax is 14.5 cents per gallon. Over the same 12,000 miles per year, at an average of 25 mpg, this would work out at $69.60 in taxes. Well, state taxes anyway--federal taxes add to this amount.

Some news outlets have reported that the state's new tax applies only to electric vehicles, highlighting the injustice of taxing electric cars at a higher rate than the tax regular drivers would have to pay on gasoline. Were this clearly the case, we'd agree.

But bill S2531 doesn't actually mention electric vehicles anywhere. Specifically, the bill "Establishes mileage-based fee on passenger vehicles; exempts passenger vehicles from motor fuels tax."

Were the bill to maintain current gasoline tax and only charge electric vehicles at the 0.00839 cents per mile rate, they'd indeed be more expensive--but as we see it, the new bill would charge electric and gasoline vehicles at exactly the same rate.

Mileage would be recorded at the time of vehicle sale, then submitted annually allowing the state to calculate the correct tax. It could also be checked during the state's bi-annual emissions inspection (pdf file).

Meanwhile, the state's 14.5 cent per gallon gas tax would disappear--but the driver of a gasoline car doing 12,000 miles per year would end up paying more anyway, equivalent to the $100.68 figure rather than the current $69.60. And they'd still be paying the federal gas tax, which owners of electric cars wouldn't be.

The bottom line? New Jersey's new per-mile tax actually looks quite fair to us.

It's there solely to ensure New Jersey electric vehicle drivers pay the same amount for the roads as anyone else. Not more, not less--the same amount. If that's the way it stays should the bill be passed, electric car owners shouldn't have much to worry about.


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Comments (19)
  1. I'm guessing this article represents a rewrite of an older article with a different conclusion. If so, it would have been nice to acknowledge that at the beginning of the article.

    I almost didn't read the article because I thought I already had. Glad I read it, and thanks for the correction to the earlier article.

  2. @John: Actually, we had published an entirely different article yesterday, based on some information that turned out to be faulty.

    Rather than rewrite that piece, we pulled it down and Antony took a fresh look at the whole topic. That resulted in this new piece.

  3. Seems fair, all vechicles pay similar fee based on use of infrastructure. From a logistic standpoint the fee is the same regardless of fuel type. It doesn't matter if pumping gas, electric, propane, NG, hydrogen, compressed-air, or water.

    One minor note: some mileage will be out-of-state, so owners may initially pay both NJ fee & another states gas tax. As more states transition to a per-mile tax, then the issue becomes insignificant, (as transparent as gas taxes are today).

  4. The new tax/fee system is revenue neutral if your vehicle gets 17.28 mpg.

    I think this is a huge step in the right direction. One could argue the fairness of the 0.00839 cent/mi rate. But it seems OK to me.

    This bill is the most unfair to gas vehicles that are light weight and get high gas mileage (like motorcycles) because they get taxed as if they were consuming much more fuel, and light vehicles cause very little wear and tear on roads.

  5. I agree. There's a degree of unfairness when the heavy gas guzzlers pay the same tax as the more lightweight fuel efficient vehicles. I'm sure there is someone in NJ who could figure out a fair way to index the tax based on the vehicle's curb weight, EPA fuel efficiency and maybe even carbon emissions.

  6. The new fee structure makes a lot of sense to replace a gas tax for road repair. This is not just an electric car issue but a transportation infrastructure issue. Road repair costs vary depending on mileage and weight of its traffic. There is another source of damage. I have noticed many roads that seemed to be dissolving in the center of the lane. Could it be caused by petroleum products leaking from some vehicles? Assess the fees based on source of damage and don't make it overly complex.
    This legislation could be the beginning of a much more realistic approach to infrastructure funding.

  7. disappearing gas tax is a mistake. how do out of state tourists contribute? truckers? I mean its not like NJ does not need the money? reduce the gas tax maybe? but removing it is a mistake. its pathetically low anyway.

  8. I think the idea is that lack of payments from out of state drivers would be made up by in state people whose miles include driving out of state.

  9. emmisions inspections for electric cars?
    can any of them pass - with no way to measure (no tail pipes)
    one step forward - two steps back

  10. So, if I live in Philly I should buy all my gas in NJ and save the state tax?

  11. Antony,
    I wrote an article for Green Car Reports regarding the gas tax issue which I trust will be posted soon. It helps clear the air and addresses the complexity a state based fee on electric vehicles, to compensate for lost gas tax revenue, would have vis-a-vis the current system which is obviously inadequate.

  12. I agree the per milage tax does seem fair. I live in Virginia and have a Nissan Leaf. We are a low milage household. Driving about 3500 miles a year. We pay $65 flat fee road user tax which works out to say 2.2 cents per mile. Way more than my neighbors who drive gas gobblers.

  13. I think the easiest solution is to add a $100 fee to the yearly registration fee for a full electric and $75 fee for an EREV.

  14. I Wish Michigan would be so equitable...

  15. No problem with idea of paying fair share for EVs , but a flat per mile rate is a plus for only the oil companies and discourages efforts for our transportation modes to become more energy efficient, and discourages the use of alternate fuels.

    Driving Electric puts more dollars back into the local economy rather than sending dollars overseas for foreign oil.

  16. Seems to be a decimal point error in the reported proposed tax rate. Would have to be .839 cents/mile or $.00839 for the arithmetic to work out to $100.68 for 12,000 miles.

    Ideally, the tax would also factor in the vehicle weight as well as miles driven per year, to account for heavier vehicles causing more wear and tear on roads.

  17. Apologies Brian, that's my wording rather than a decimal point error. As you state, it can be considered $0.00839, or .839 cents.

  18. I remember reading once that the amount of damage done to a road by a vehicle is equal to the fourth power of the load per axle. In simple terms doubling the weight increases the damage by a factor of 16, or to put it another one heavy SUV can do the same damage to a road surface as 16 light cars. I could only support this tax if it charges heavier vehicles a lot more than light ones.

  19. I wish Washington State had gone with the per mile tax. Rather than the stupid flat $100 fee, you pay for what you use, which is only fair. And it leads the way to implementing it for higher mileage cars which is the trend. My truck won't see another 12,000 miles for 6 years, yet I will have to pay the equivalent of that EVERY YEAR. Yes New Jersey, you are smarter than Washington State!

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