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Why Taxes On Electric Vehicles May Get Harder To Impose In Texas

Interest in electric vehicles like the Tesla is expected to grow by the next legislative session.
Interest in electric vehicles like the Tesla is expected to grow by the next legislative session.

When state lawmakers met in Austin this year, many people expected them to impose a new tax or fee on electric cars in Texas. The logic was simple: State highway construction is funded partially by a gas tax; electric vehicle drivers who use roads but don’t buy gas should contribute their fair share.

The big question, it seemed, was not if a new tax on EVs was coming, but how much it should be.

The session ended, though, and no fees were imposed. And lawmakers may find it even more difficult to push for fees the next time they convene.

Electric vehicle ownership and charging infrastructure is expected to grow significantly between now and the state’s next regular legislative session in two years. The lobbying power of the industry — and the number of enthusiastic electric vehicle drivers opposing such fees — will likely grow as well.

Fear of angering voters who drive has kept lawmakers from increasing the state’s gas tax since 1991.

Electric vehicle drivers are becoming a big constituency in Texas politics,” said Tom “Smitty” Smith, president of the Texas Electric Transportation Resource Alliance, a group that pushed for policies to electrify the state’s transportation infrastructure this session.

Smith, whose group represents electric vehicle dealers and environmental groups, estimates Tesla owners alone sent around 7,000 messages opposing a proposal to charge an EV tax of $200 annually. He estimates another 3,000 "calls, emails and letters" were sent by people not specifically affiliated with Tesla cars.

Smith said the power of messages like those is amplified by the fact that many of them come from swing districts in large metropolitan areas.

“When you have Republicans hearing from electric vehicle owners — ‘This is a free market issue' — it becomes an entirely different ball of wax than it might if the only people who heard about this issue were liberal Democrats,” he said.

The growth in electric vehicle ownership will likely be aided by the rollout of utility models like Ford’s electric F-150, which could appeal to more drivers outside of urban and suburban areas. A federal infrastructure proposal from the Biden administration, if passed into law, would also bring tens of thousands more electric vehicle charging stations to Texas and likely increase EV adoption.

That, of course, would also mean even less gas tax money for the state’s highway fund.

“We’re going to see more and more hybrid and electric vehicles on our roads, and we've got to pay for the maintenance,” Republican state Sen. Kel Seliger of Amarillo said this spring in support of raising fees.

To that, some groups representing the electric vehicle industry have an answer: “Let’s make a deal.”

The Texas Department of Transportation has estimated that each electric vehicle that replaces a gas-powered vehicle could, on average, result in a $100 annual loss in state highway fund revenue.

Smith said that's why the $200 annual fee proposed by lawmakers this year sounded like an effort to "penalize" drivers of electric vehicles.

“We offered $100, $120 and a fee that varied by miles driven,” he said, “but they were all rejected.”

Copyright 2021 KUT 90.5. To see more, visit KUT 90.5.