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Published on December 30th, 2015 | by Michael Barnard


Electric Cars Don’t Pay Gas Taxes: So What?

December 30th, 2015 by  

Is it a sin that electric car owners don’t pay gas taxes? No, not at all, but you’d never know it listening to some people squawk. There are anti-electric car types who think this is a huge deal, instead of kind of an embarrassing story for internal combustion cars. Let’s tear it apart and see, shall we?

The gas tax is pretty cheap per person

The average US gas tax is about 48.7 cents per gallon. At the average 13,476 miles US citizens drive, assuming 20 miles per gallon, that comes out to $328 annually. If they drive fuel efficient cars, it obviously goes down. For example, at the current highly theoretical average of 25 miles per gallon, the average person pays about $263. If they drive a car that manages 30 miles per gallon, they are down to $218. According to the logic of electric car haters, fuel efficient cars are getting an unfair ride, too.

The gas taxes don’t pay for the roads and highways:

“your gas taxes don’t cover the cost of roads and highways. Since the interstate system was implemented in 1947, US spending on highways has exceeded the amount collected from fuel and vehicle fees by more than $600 billion. Where has the rest of that money come from? Mostly bonds, property taxes, and the general fund. So even if you don’t drive, you’re paying for highways, a type of infrastructure that only cars can use. Roads in your city are generally financed through local, property, and sales taxes”

Well, that’s kind of annoying, isn’t it? Taxes levied to pay for roads don’t actually cover their costs. Actually, they don’t even begin to cover the costs. So electric cars not paying the small amount that purchasing gas contributes to road maintenance is a bit of a non-issue. Society is subsidizing roads big time.

Air pollution from internal combustion cars has serious health-related costs:

“The OECD has estimated that people in its 34 Member countries would be willing to pay USD 1.7 trillion to avoid deaths caused by air pollution. Road transport is likely responsible for about half.”

The Organisation for Economic Co-operation and Development Electric represents most of what we consider the developed world, including the USA, UK, Australia, Canada, and 30 other countries. China and India aren’t members, so this isn’t about places with terrible pollution — this is about your street corner.

Electric cars emit no particulate matter or chemical pollution in urban areas. As the Union of Concerned Scientists pointed out recently, you have to get deep into coal country before pure electric cars are as polluting as even the most efficient of hybrids. Even there, it is entirely possible to buy entirely pollution-free electricity from renewables in most places, and a larger percentage of electric car owners do that than the general public.

Collisions due to vehicles are subsidized from the public purse:

“Public revenues paid for roughly 7 percent of all motor vehicle crash costs, costing tax payers $18 billion in 2010, the equivalent of over $156 in added taxes for every household in the United States.”

Since Teslas are leading the way in making driving safer through autonomy, that’s yet another societal value proposition that they are advancing. This one by itself is worth half of the $300 that the gas taxes cost, according to these numbers.

Climate change is costly, and internal combustion vehicles don’t bear that cost:

“Four global warming impacts alone—hurricane damage, real estate losses, energy costs, and water costs—will come with a price tag of 1.8 percent of U.S. GDP, or almost $1.9 trillion annually (in today’s dollars) by 2100.”

Obviously, electric cars are part of the answer to climate change, not a major contributing factor as internal combustion cars are. The argument that electric cars aren’t paying their fair share is just getting more and more embarrassing for people who make it, isn’t it?

Internal combustions engines make noise, and traffic noise makes people less healthy:

“The social costs of traffic noise in EU22 are more than €40 billion per year, and passenger cars and lorries (trucks) are responsible for bulk of costs. Traffic noise alone is harming the health of almost every third person in the WHO European Region. One in five Europeans is regularly exposed to sound levels at night that could significantly damage health.”

Of course, electric cars make much, much less noise than internal combustion vehicles and so reduce this health cost as well. Despite this, the USA is absurdly trying to regulate electric vehicles to make more noise than most internal combustion vehicles instead of sensibly forcing older vehicles to get quieter.

What does this net out to?

Screen Shot 2015-12-27 at 12.41.57 PMThe City of Vancouver did a societal cost analysis of various forms of commuting that is worth looking at. The study was done when the Canadian dollar was close to at par with the US dollar, so this holds roughly true for the USA. Five kilometres is just over three miles, to give a sense of scale for people living in the USA.

Electric cars, especially ones with autonomous features, save a portion of that societal cost. Let’s extend that cost for cars to a full year’s driving for the average US citizen. Americans drives an average of 13,476 per year, or 21,688 kilometres. That means that the average societal cost per US citizen of car driving is about $12,000 per year.

Screen Shot 2015-12-29 at 10.30.08 PMThe underlying data from the Vancouver study shows that the portion of costs avoided by electric cars represent about 37% of the total, or about $4,440 per year. Remember that $300 for someone getting about 20 miles per gallon? That’s less than 7% of the value that an electric car provides every single year.

Let’s extend this saving over a decade of car life. That’s about $44,400 of societal value given back. That’s money that could be spent on hospitals or school or just not paid in taxes. Or even used to maintain roads and bridges, if someone wanted to do that.

Electric cars are a huge economic win for the societies that promote them. Making the claim that electric cars are somehow subsidized by not paying gas taxes when the opposite is actually true — that car drivers are heavily subsidized already and electric cars reduce that societal subsidy — is evidence of heavy blinkers.

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About the Author

Mike works with startups, existing businesses and investors to identify opportunities for significant bottom line growth in the transforming low-carbon economy. He regularly publishes analyses of low-carbon technology and policy in sites including Newsweek, Slate, Forbes, Huffington Post, Quartz, CleanTechnica and RenewEconomy, with some of his work included in textbooks. Third-party articles on his analyses and interviews have been published in dozens of news sites globally and have reached #1 on Reddit Science. Much of his work originates on Quora.com, where Mike has been a Top Writer annually since 2012. He's available for consultation, speaking engagements and Board positions.

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