NJ Per-Mile Tax Already Scrapped, Electric Car Fee Proposed Instead

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A New Jersey senator's plan to drop gas tax and charge all vehicles a per-mile fee has already been scrapped, according to reports.

Instead, Asbury Park Press reports the state is now looking towards a flat fee of $50 for electric vehicles.

The state is one of several exploring ways to account for electric cars not paying any gas tax to contribute to its roads and infrastructure.

Proposed by state Sen. Jim Whelan, New Jersey's plan would have involved dropping the state's gas tax entirely, instead charging all vehicles--electric or otherwise--a per-mile fee to use the state's roads.

A fee of $0.00839 per mile was suggested. For the average car driving 12,000 miles per year, that would work out as $100.68 in tax.

A gasoline vehicle doing 25 mpg would pay $69.60 over the same 12,000 miles, at the state's current rate of 14.5 cents per gallon.

Some news outlets immediately cried foul, noting that an electric vehicle would end up paying more over a year than an inefficient gasoline vehicle--but upon closer inspection of the bill, the mileage fee would apply to all vehicles, meaning electric cars would be charged an identical rate to any other vehicle.

As a result, it's actually one of the fairer systems we've seen for taxing electric vehicles, as it's based solely on usage rather than an arbitrary measurement.

The scheme did have opposition from others, though. Sen. Joe Pennaccio said it would akin to "letting the proverbial camel's nose in the tent. Once you start charging people by the mile... it would be a lot easier to keep rising those costs."

Electric car owners and alternative-fuel vehicle owners may have dodged one bullet with the new $50 fee idea, as it's around half the amount they'd be charged if they drove 12,000 miles under the previous scheme.

But they might be hit by another: A straight $50 fee is equivalent to a gasoline vehicle doing 34.8 mpg over 12,000 miles, so electric car owners would effectively be paying more tax than several gasoline and hybrid vehicles on the road today.

If Whelan's old plan was described as a bad idea by some, the new plan is simply a different sort of bad idea--and one less discriminate of how often (or how little) owners use their vehicles.

Unfortunately, it's also a necessary evil.

Until states charging more for gasoline tax (political suicide, but the root of the problem), or finding other ways to drum up revenue for roads and maintenance, fees for electric cars are here to stay.


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Comments (12)
  1. I think it is kinda of naive to imply that "gas tax" is the root of the problem. The state raises revenue from income tax, sales tax, tire tax, property tax, tolls, etc. Gas tax is not the only way to pay for infrastructure, nor is an EV tax.

    They just need a way to either spend less, or raise more money. The solutions are many, but someone needs to take action.

    For the moment, taking action against EVs will do little or nothing to raise revenue and is too short sighted.

  2. John,
    I didn't read that the "gas tax is the root of the problem" - Antony did write, "If Whelan's old plan was described as a bad idea by some, the new plan is simply a different sort of bad idea-- i.e., the new plan is really bad - but, and this is the key point - it raises revenue from those who don't pay gas tax - and that's why it just might pass.

    But to respond to those who might say the "gas tax is the root of the problem", I would rephrase it as "the inability to raise the gas tax is the root of the problem" , and NJ is one of the nation's best examples with its 10.5-cent excise tax, the 48th lowest in the nation according to the Tax Foundation; not increased in over 20 years.

  3. I agree John, though my comment was more to imply that had gas tax risen in line with inflation, states wouldn't now be looking in a panic for ways to boost their revenue.

    It's the same issue in virtually every state proposing some sort of EV tax - some have pretty much frozen state gas tax since the 1980s and unsurprisingly find that they have a revenue shortfall.

    I suppose you could say that the tax itself isn't the problem, more a culture that makes it political suicide if anyone were to propose a raise in the tax to cover road maintenance etc.

  4. This is also unfair to people that drive very little. Retirees on fixed budgets and only go to the local store and church once a week should not pay the same amount as someone that drives 25,000 miles a year.

  5. Antony (or readers):
    Can you provide links to "Some news outlets immediately cried foul, noting that an electric vehicle would end up paying more over a year than an inefficient gasoline vehicle (in VMT fees)". Thanks

  6. Hi Irvin,

    Apologies, missed it out. We covered some of the inaccurate reporting in the previous NJ tax piece: http://www.greencarreports.com/news/1083865_how-much-does-nj-per-mile-tax-bill-affect-plug-in-cars

    Several outlets (including us admittedly, before a reader pointed it out) initially reported inaccurate information, but we quickly realized some of the subtleties in the language of the bill, and noticed that it applied to all vehicles and not just EVs.

  7. No prob, Antony - I was so intrigued by this development I added it as a news item on Planetizen.com:
    New Jersey Drops VMT Fee for EV Fee
    Thanks for catching this - this case - meaning this attempt to charge a VMT fee, has a lot of lesson for VMT fee proponents who are also EV advocates.

  8. If we are talking about paying for road maintenance, a mileage plus vehicle weight fee is the only fair way.

  9. I still propose my tire fee as an alternative... :)

    If we pay $0.30 per gallon on gas tax and get about 30mpg, then that is a tax of $0.01 per mile. A 60,000 mile tire would pay $600 over 5yr for 12k mile per year. Of course, that is assuming that they will remove the $0.30/gallon tax.

    But that would be really bad case for EVs. If gasoline drop $30/gallon overnight, the case for EV will be even harder to justify.

  10. "gasoline drop $30/gallon overnight"

    gasoline drop $0.30/gallon overnight.

  11. Xiaolong,
    Keep an eye on Wa. state legislation that includes a gas tax increase of 10-cents and "weight fees"

  12. The only argument against this more fair tax for everyone is that it's easy to later raise the rate? How is that different from the gas tax?

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