Why Electric-Car Owners Should Be Happy For New Colorado Tax

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Old cabin near Twin Lakes, along Colorado's Top of the Rockies Scenic Byway

Old cabin near Twin Lakes, along Colorado's Top of the Rockies Scenic Byway

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Stories about new or proposed taxes on electric cars are generally viewed as negative, even punitive, by plug-in vehicle advocates.

Now, there's one that likely shouldn't cause all that much ruckus: Colorado is about to levy a $50 annual fee on any car that plugs into the wall to recharge its battery pack.

In doing so, it joins the fast-growing list of states (both red and blue) that single out cars with plugs--or in some cases, high fuel efficiency--for new and special added taxes.

Seven or more states

The rationale is that because these cars don't use gasoline--or at least, use less of it--their owners aren't contributing their fair share of gasoline-tax revenue to state and Federal coffers.

As many know, there aren't nearly enough gas tax dollars to keep America's roads up to snuff as it is.

Electric-car tax initiatives are currently in effect or under discussion in Arizona, Michigan, Oregon, TexasVirginia, and Washington.

But what's so great about Colorado's new tax, which takes effect January 1, 2014?

For one thing, it's low: just $50 a year, compared to the $100 level in many of the other states that have added the special taxes.

Paying the annual fee will get the plug-in electric car owner a decal that must be attached to the upper right-hand corner of the windshield.

Funding public infrastructure

Even better for electric-car advocates, the legislation that created it (HB 13-1110) specifies that only $30 of that money goes into the state treasury for the Highway Users Tax Fund.

The other half, fully $20 per plug-in car per year, goes into the state's Electric Vehicle Grant Fund, which pays for public charging stations and other infrastructure.

That fund, established four years ago, was never allocated a revenue source--so until the electric-car tax was implemented, its goals remained purely theoretical.

Electric-car advocates worked together with legislators to craft the Colorado compromise, according to a source involved in the negotiations, who asked to remain unidentified.

Tesla Roadster recharging at Denver International Airport, from SolarDave blog

Tesla Roadster recharging at Denver International Airport, from SolarDave blog

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Averting more onerous fees

The proposal successfully forestalled future actions by elected officials less friendly to plug-in cars and a perceived "green agenda" largely identified with one side of the political spectrum, said the source.

So while no one likes new taxes, this one seems less onerous than many similar levies in other states.

The bill has been passed by both houses of the Colorado legislature, and is now awaiting the signature of governor John Hickenlooper.

It's almost enough to make electric-car owners believe in the famous words of Supreme Court Justice Oliver Wendell Holmes Jr.

In a rebuke to a secretary who had complained about the duty, he supposedly said:

I like to pay taxes; with them, I buy civilization.


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Comments (24)
  1. Why should we be happy about a tax that burdens the few electric car owners in the state with the cost of an infrastructure that will benefit all electric car owners in the future. It make no sense.

    If electrification of the vehicle fleet is a priority, why is it done on the backs of a small number of earlier adopter rather than the general tax base, like is done elsewhere?

    How many EV owners are in the state? Perhaps 1000? At $20/car, that would be $20,000 per year. What does it cost to install a public charger? $4000 each (more than a home charger for sure. )

    So the fund will supply five chargers in the first year???? Think about it, there is no good news here.

  2. I agree with the previous poster.

    Bad idea.

    Not the way to promote the necessary use of electric vehicles and once a tax is applicable, they will only raise it.

    After all, how much wear and tear to the highways does an electric vehicle cause anyway?

    Here in IL, I pay the same for my village sticker as any other vehicle.

    This tax is brought to you by those who are invested in the oil business as well as those who never saw a tax they didn't like.

  3. "After all, how much wear and tear to the highways does an electric vehicle cause anyway?" Actually, more than a comparable size ICE vehicle because of battery weight. The curb weight of my 85 kWh ModS is nearly 2.5 tons. While I don't relish paying taxes any more than the next guy, I don't expect a free pass for use of the roadways just because I've adopted a new technology.

  4. While it is admirable for you to "pay your fair share", I think the better path, for now, is to work to encourage the adoption of electric vehicles to minimize the externalities of gasoline (national security, local pollution, global warming, etc.)

    There will be plenty of time for EV's to pay once they reach 5% of vehicle population.

  5. I bought a ModS and a Leaf last year. We are an all electric family. I was encouraged by the $15,000 in tax credits I got from the Fed and the $5000 in rebates I got from CA, along with single occupant use of the HOV lanes. Can we honestly say that paying $50-$100 a year for our fair share use of the roadway would be that discouraging to the adoption of EVs? I don't think so but I respect your viewpoint.

  6. It kinda shows the silliness of the exercise. On the one hand, $15,000 in tax credits, on the other hand, ask for $100 back.

    Shows different branches of government not all singing from the same hymnal.

  7. personal vehicles do not measurably impact wear and tear on our highways - heavy trucks and (in Oregon) studded tires/chains do by far the most damage (according to highway studies I last researched in the late 90s). The 'fair' tax is to tax the heavy trucks, which we all pay for in higher cost of goods, and those who purchase studded tires/chains. However, moving away from a gas tax and toward a standard 'usage' tax when vehicles are registered can also be 'fair'. Don't single out specific types of vehicles - or do; charge a higher fee for my Chevy Tahoe because it gets 18mpg (on a great day) than for my Tesla Model S because society deems reducing our dependency on oil as a good thing....

  8. I have noticed many roads dissolving in the center of the lanes. Nothing drips out of my EV to do that damage.

  9. A tax based on weight and actual miles driven for all cars is the only fair solution. I only drive about 10,000 miles a year. Should I pay the same amount for road maintenance as someone that drives 25,000 miles a year? The odometer reading could be a semi-annual process like taking the car in for emissions testing or tag renewal.

  10. A REALLY bad idea... There are probably more cars with a broken or out of sync (different sized tires for example) odometer in any state than EV cars there. You'd want to create another bureaucracy that would have difficulty funding itself much less generate any additional income for roads. Ad volorem tax in GA is an example of such tax. Georgia collects it and it ends up funding its own collection process. I guess it creates jobs but it does make me mad :-)

  11. As an electric car owner in Colorado I think this is fine. First, I don't believe that all taxes increases are bad generally. The state uses current taxes to provide electric car owners a size able tax credit, even for a lease. This tax is still below what I would be paying in gas tax if I didn't have an electric car. I really don't think the $50 a month is the barrier to entry.

  12. @Justin: Even better, it's $50 a year--not a month!

  13. Would it not make more sense to simply reduce the "tax credit" value, rather than giving with one hand (tax credit) and taking with the other (EV tax).

  14. I guess that is better than charge by miles driven.

    The last thing that EVs need is actually converting the entire system of "gas tax" to mileage tax. By doing so, the gas price will drop by at least $0.50/gallon and it will quickly make the cost of EV prohibitive comparing with other high mpg ICE or hybrids...

  15. I fully support a tax such as this. Road tax revenues aren't enough, and compromises are required. At the same time, gas taxes need to gradually raised in a planned way. There is no way that a $50/year fee is going to be a barrier to adoption and those who are getting their feathers ruffled are just being silly. The current gas tax system does indeed penalize heavy trucks and cars because they get poor efficiency and so contribute more. It's just not enough since the taxes haven't kept up with inflation.

  16. I think those politicians eager to slap extra taxes on EVs in this early stage of adoption should be subjected to special IRS audits. Including a full body cavity search of course because no doubt they have petrodollars pouring out of their...ears;).

  17. I like this proposal. :)

  18. Let us say the cost of a charger is $750 bought in bulk, and the cost to install in public areas would be another 1200, it's some 2 grand to install a charger.
    Say teh grants are matching funds, and the federal tax credit still applies,
    the grants could be some $600/charger, and that would match both the federal credit and the local investment.

    that means every 20 cars, one public charger would get a grant.

    a little thin, if the state could match this with the general revenue.
    then, it would be a good fit, but, it's a start

  19. The purpose of the tax is to kill the electric car, because they represent only 0.5% of the cars, then the tax is negligible.

  20. @Carol: Given that plug-in electric car buyers on average are far more affluent than Americans at large--and that the cars carry a hefty cost premium--do you really think $50 a year will "kill the electric car" ??

  21. I think these taxes on any car that plug into a socket are on their way to a legal fight. Does this mean that the owner of a higher efficiency car, not a plug-in, that gets a similar MPG rating, should also pay an additional tax? Should Prius owners pay this tax (12,000/yr@50 MPG=240 gallsx 0.42 (average tax per gallon combined federal/local)= $100.80.)Is this the formula for this $100 fee per anum? Well, as it happpens, a 100% electric car may have to pay this amount. But any plug in hybrid? Hybrids still buy gasoline. Electrics do not. I am mystified as to this trend by states as to this new ruling.

  22. By and large, the electric vehicle advocacy community in Colorado supported this bill. We agreed with the argument that electric vehicles should pay a fair share of the cost of maintaining highway infrastructure. Second, there have been some rather onerous proposals - for example, a proposal was floated last year to require EV owners to install a separate electric meter so that their electricity for EV charging could be taxed. The cost of the meter would likely be greater than 10 years of tax collections. This modest fee (which was calculated on an energy equivalent basis - it is the state gas tax that would be paid by a gasoline vehicle getting 99 mpg driven for 13,000 miles/year) puts the issue to bed.

  23. Also, the $20 fee for charging infrastructure is projected to generate significant revenue. The fiscal note projects $150,000 in FY 2014-2015. The benefits of additional charging infrastructure in addressing range anxiety seems like a much bigger boost to EVs than the minor deterrent of a small annual fee. - Will Toor, Transportation Director, Southwest Energy Efficiency Project

  24. I live in Colorado. I own a 300 lb electric motorcycle and ride it most days. I supported a road tax, but felt the fee should be based on the weight of the vehicle. My 300 lb motorcycle won't do the same wear & tear as a 2.5 ton car or a large EV cargo truck; yet, I'm paying the same tax.

    Think about it - weight pays a role in how much road tax gas mobiles pay; the heavier the vehicle generally the less MPG it gets; hence, it pays more annual tax than a lighter vehicle going the same distance. The same should go for EVs.

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