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Virginia repeals the Prius tax

Under new democratic governor, and former electric vehicle company founder, the Virginia tax on hybrids is now history.
Toyota Prius

Last year Virginia did something interesting. Instead of taxing its gasoline at the pump in the manner most are familiar with, it instead decided to tax gasoline at the wholesale level. Yeah!, We don’t have to pay the gas tax! Not quite. The 17.5 cent per gallon tax was replaced with a 3.5% wholesale gas tax which is then passed onto consumers by station owners. There were a lot of other changes too, one of which was a new tax on the registration of any hybrid, electric, or alternative fuel vehicle. It started out at $100, but before implementation, political compromises reduced that to $64.

The idea of taxes of this type that hit just green vehicles is that since the new greener cars use less fuel, they should pay more taxes to offset the reduction in gasoline tax they pay. Usually the gas taxes are called by politicians “road and bridge repair taxes.”

There are a number of problems with targeting hybrids. First, as the Washington Post pointed out, some hybrids use more gas than non-hybrids. For example the hybrid Lexus 460 L AWD gets just 18 mpg combined. The non-hybrid, similarly sized Lexus ES 350 gets 24 mpg combined. Therefore the logic behind the hybrid tax is flawed. Also, who are we kidding? States, municipalities and the federal government use the tax on gasoline to pay for whatever they choose, including, in Massachusetts for example, hundreds of millions of dollars to subsidize subway and commuter rail trains. Let’s not pretend that the taxes on gasoline, or cars in general, are used exclusively to pay for “roads and bridges” as the narrative usually portrays.

In any case, Virginia hybrid owners, green car advocates, and many others did not like this new tax. The legislature has now changed the law and it is gone for hybrids. EV owners and alternative fuel vehicle owners still have to pay it according to the Washington Post. If it makes EV owners feel any better, the $7,500 federal tax credit on EV purchases will cover their annual Virginia fee for 117 years.

The new Virginia law will be signed by incoming democratic Governor Terry McAuliffe, former Clinton-Gore strategist, and co-founder of electric vehicle company, GreenTech Automotive.

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Comments

Chris in Raleigh (not verified)    February 5, 2014 - 11:12AM

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North Carolina has a new EV Tax for 2014 which should be repealed for these reasons:

1. My family already paid $540 extra in North Carolina "Highway Use Tax" (3%) on the additional $18k I spent for a Nissan Leaf, beyond the cost of a comparable car such as a Nissan Versa ($35,020 vs. $16,890 for SL model).

2. My family only drives the Nissan Leaf around town as it has limited range. The local roads are paid mostly with local taxes, not state gas taxes. When we go on longer trips on state highways, we take the gas car and pay state gas taxes.

3. My family has to overpay for property taxes on the Nissan Leaf because the tax value assessed does not reflect the actual market value, which is $7,500 lower than the purchase price due to the federal tax credit.

4. My family pays state tax on the electricity used to power the Nissan Leaf.

5. The state of North Carolina has a projected $60-billion transportation budget shortfall over the next 30 years, while the EV "fee" (a tax) this year is projected to bring in only $160k this year. (source: Raleigh News and Observer, 1-11-2014)

6. Other neighboring states such as Georgia provide a $5,000 credit, not a tax.

7. Gas cars aren't paying for the massive military costs incurred to protect oil supplies. Same for cost of health and environmental impact.