Should the U.S. Government Increase Gasoline Taxes or Electric Vehicle Taxes?

Should the US government increase gasoline taxes or electric vehicle taxes?
Should the US government increase gasoline taxes or electric vehicle taxes?

There is a very interesting debate developing in the U.S. amid signs that a number of states across the country are looking to introduce their own form of local electric vehicle tax. There are concerns that this additional tax could stunt short to medium-term growth of the electric vehicle market and indeed some are concerned about the long-term future of the industry.

As a consequence, many people are now starting to ask whether the U.S. government should finally show its hand with regards to electric vehicles and traditional gasoline powered vehicles. Is it really time to introduce electric vehicle taxes or should the federal tax on gasoline be increased?

Increase gasoline taxes

While state gasoline taxes have increased over the years, many people will be surprised to learn that there has been no increase in federal gasoline taxes since 1993. The current rate is 18.4 cents per gallon, although even if this had been increased by inflation since 1993 to the end of 2012 the rate would have been 28.97 cents per gallon. This would have been a 50% increase in the U.S. government’s gasoline tax income which would certainly have come in very useful.

When you bear in mind the stance of others such as the UK government, with gasoline tax moving seemingly ever upwards, it is somewhat bizarre that the U.S. federal government has not changed this rate since 1993. In reality, in real terms the rate of the federal gasoline tax has in fact reduced over the years as inflation continues to ravage the cost of living, cost of services, and cost of products.

Introduce widespread electric vehicle taxes

The basic debate today is whether the U.S. government really supports the introduction of electric vehicles or whether indeed allegations that the authorities are "in the pockets of the oil companies" are indeed correct. A simple increase in gasoline tax would not necessarily have a major impact upon the dollar in the pockets of U.S. taxpayers but would obviously have a positive impact upon government income and budget expenditure.

Quote from ElectricForum.com : "Is it time to increase the tax on gasoline?"

The introduction of an electric vehicle tax at this moment in time would effectively undo much of the good work which has been done with regards to taxpayer investment into the industry. Where is the sense in investing in an industry with a "fixed cost" only to then agree to increase that cost which then reduces the attractions of the industry, both to companies and individuals, and could impact the long-term success.

A balanced argument

Those who drive gasoline powered vehicles will argue that they should not be subsidising the electric vehicle market with higher taxes. Those who drive electric vehicles will suggest that they should be supported in the short term while the industry "finds its feet"; and why should they effectively subsidise the cost of other services and situations created by gasoline emissions?

This is an argument which will go on forever and a day and the reality is that the U.S. government is somewhat sitting on the fence. A simple increase in gasoline taxes would help to spur investment and sales in the electric vehicle industry, but then again (and perhaps more ominously) it would alienate the vast majority of the voting public who still drive gasoline powered vehicles.

Conclusion

There are many arguments for and against the introduction of electric vehicle taxes, there are many arguments for and against an increase in the federal gasoline tax but the fact is that the U.S. government needs to decide whether it is wholeheartedly supporting the electric vehicle industry or looking to keep the voting public happy. How long can the government really sit on the fence?