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Virginia Could Overturn Road-Use Tax for Hybrid Vehicles

Hybrid Vehicle Tax Could be Overturned
Hybrid Vehicle Tax Could be Overturned

A number of States are struggling to come up with solutions to fund highway infrastructure maintenance and improvements, but not all of them are entirely fair. Are States picking on electric and hybrid vehicles?

A tax on electric and hybrid vehicles seems to make sense, but is it fair? First, fuel taxes used to be the most fair way to make each vehicle pay its fair share of highway maintenance. Heavy vehicles do more damage and use more fuel. They pay more fuel taxes, which pays for their higher-than-average impact on the roads. With the introduction and adoption of vehicles with inordinately high fuel economy, the fuel taxes they pay, for a Toyota Prius or Tesla Model S, for example, are low to non-existent, and aren’t congruous with the damage they do to the roads.

In order to get around this, some States have enacted per-year taxes on electric vehicles, and some even on hybrid vehicles. Virginia, for example, enacted a law last year that would tax hybrid vehicles $64 per year, for a total revenue of about $11 million. This year, that tax could be repealed. The Virginia Senate has already voted it down 35:3, Senator Adam Ebbin calling the $64 annual hybrid vehicle fee “illogical.” Governor Terry McAuliffe has already promised to sign the repeal if it comes across his desk, which is good news for hybrid vehicle owners in the State.

Still, what to do about electric and hybrid vehicles, and plug-in hybrid electric vehicles, which use little to no fuel, is something many States are tackling. Some pretty stupid ideas are being flown, such as one Governor that wanted to raise the sales tax and drop the gas tax altogether, and charge a $100 annual fee to electric vehicle owners, which makes absolutely no sense (oh, that was Virginia, too). North Carolina recently enacted a $100 annual road use fee, which actually short-changes the State, so electric vehicle drivers should be happy about paying far less taxes than they would in a conventional vehicle. The most-fair tax adjustment would require a complete overhaul of the system, but you know that’ll never happen.

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