Report: EV Mileage Fee Would Cover Gas-Tax Losses

A University of California-Davis report proposes charging electric vehicles a mileage fee to make up the revenue lost by not paying gasoline taxes.

The university’s Institute of Transportation Studies proposal would introduce the mileage fee while gasoline-powered cars would continue paying gasoline taxes.

The California Legislature requested the report on alternatives to the state’s EV registration fee.

As more people drive EVs, gas-tax revenue for road repairs is dwindling.

The UC-Davis report submitted to the legislature says California is among many states that have opted for the easy way out – charging an extra registration fee for EVs.

But report author Alan Jenn, a research scientist with the Plug-In Hybrid & Electric Vehicle Research Center at UC-Davis, says this is neither a sustainable nor effective solution.

“The California zero-emissions vehicle registration fee doesn’t support the long-run funding of transportation infrastructure, nor is it equitable for drivers of electric and hydrogen vehicles,” Jenn says in a statement.

Others argue the gas tax must be replaced by a mileage-based fee as soon as possible to avert increasing shortfalls in road funding. But the report says switching from the gas tax to a mileage fee would be technically and administratively difficult.

“California now has the opportunity to support alternative funding mechanisms,” Jenn says. “Our study finds that a per-mile road charge, designed specifically for zero-emission vehicles, is a relatively low-cost and sustainable solution to funding our roads.”

After California’s Transportation Infrastructure Bill of 2017 was passed, transportation revenue in the state was bolstered by numerous fees including gasoline and diesel taxes, as well as an annual registration fee exclusively for zero-emission vehicles.

The report concludes the registration fee is not a sustainable mechanism to provide adequate funding as California transitions towards ZEVs. It also finds the fee slows the market adoption of ZEV technologies with as much as a 20% decrease in new ZEV sales.

After looking at a fuel tax for hydrogen and electricity, as well as a road-user charge (RUC), it concludes a ZEV-exclusive RUC is the most promising alternative to the ZEV registration fee.

The report says the proposed transition is expected to cost less, be easier to administer and provide a smooth transition away from gas taxes. It concludes that a mileage-based user charge would be the easiest and least costly way of addressing the long-term decline of gas-tax revenue.