IUPUI Researchers: Don't Bother With An Electric Car Flat Tax -- It Won't Fix Roads

May 27, 2016

As states look to pay for replacing crumbling infrastructure, some are considering taxing electric vehicles -- from many of which the state does not make any gas tax revenue.
Credit Frank Hebbert / https://www.flickr.com/photos/f-r-a-n-k/359123912

Researchers say a flat fee on electric vehicles won’t help solve declining road funding revenues, like those faced here in the state. 

Electric vehicles don’t pay into road funding the same way traditional vehicles do because they don’t pay fuel taxes. 

So, some states have imposed flat registration fees of $100-200 on electric vehicles. 

But IUPUI professor Jerome Dumortier says his study shows that plug-in vehicles account for, at most, only about 1.5-percent of the decline in fuel taxes.  And he notes that a flat fee is economically inefficient.

“Should a person who drives, say, a Tesla with say a thousand miles per year, should that person pay the same charge as somebody who has a Nissan Leaf and uses the car for commuting and drives, say, ten thousand miles per year,” Dumortier says.

Dumortier says a more impactful solution is what’s called a vehicle miles traveled, or VMT, fee -- essentially charging drivers based on how much they drive.  That’s an idea that Indiana lawmakers have discussed too…though Dumortier says much of the resistance comes from privacy concerns. 

Still, he says the entire road funding model needs to shift towards VMT.