Alabama Legislature

Gas Tax Proposal Punishes Clean-Fuel Vehicles, Ties Alabama For Nation’s Highest Fees, Groups Say

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Environmental groups are alarmed that the gas tax bill filed in the Legislature today would make owners of electric and plug-in hybrid vehicles pay more to the state than owners of gas-fueled vehicles.

A summary version of the special session bill makes it less onerous than an earlier version but still is causing concern that the EV and plug-in hybrid owners would be penalized for using technology that pollutes less or not at all, conservation advocates say. After the concessions, Alabama’s fee would be tied with Georgia for the highest in the nation.

“This is a big step in the right direction for the state. Lowering the tax for electric vehicles and removing the tax on conventional hybrids show that legislators heard voters’ concerns,” said Tammy Harrington, executive director of Conservation Alabama.

“The $200 annual tax on electric vehicles is still the highest in the nation (along with Georgia), but there are improvements to this bill that will help make energy-efficient cars viable in Alabama.”

The gas tax would fund the Gov. Kay Ivey-backed infrastructure bill, called the Rebuild Alabama Act, and is estimated to cost the average driver an additional $55 a year in gasoline tax, according to authors of the legislation. But EV owners would pay a $200 annual license and registration fee; plug-in hybrid vehicle owners would pay $100. There would be no fee for conventional hybrid vehicles.

That’s down from the original bill’s $250 for EVs and $150 for hybrids.

Yet, the total still would be on top of taxes paid through electric utility companies for charging the vehicles.

Daniel Tait, chief executive officer of Energy Alabama, said the new version of the bill is “definitely better … but it is still inequitable to electric vehicles.” He said more improvements in the bill would be necessary before his nonprofit would support it.

Drivers of plug-in hybrid vehicles, which use gasoline until battery power is needed, may wind up paying even more than EVs because they would pay the increased gas tax plus the annual fee plus the tax on electricity for charging batteries, according to Tait.

Alabama Power Company said it does not make money on the tax on electricity, merely passes it on to the state. Spokesman Michael Sznajderman also said that electric vehicle users who register their cars with the company receive a discount on all energy used from 9 p.m. to 5 a.m., when they would most likely be charging their vehicles at home.

The $200 annual fee on EVs is somewhat misleading, because $50 of that goes into a fund to support a program to develop charging stations and other infrastructure for a market that is expected to grow rapidly in coming years.

Still, environmentalists say owners would be penalized compared with non-EV transportation.

Gasp, a nonprofit that lobbies for clean air policies, opposes the “unfair and unreasonable” fees on electric vehicles.

Gasp executive director Michael Hansen said of the new version, “It’s better, but not great. I’m not a fan. If the Legislature earmarks the proceeds from the EV and plug-in hybrid fees for charging stations and/or public transit, then I’m on board.”

Hansen added, “This proposal is to charge them a special registration fee for the privilege of driving a pollution-free vehicle. This is not the highest, most punitive fee in the nation; it would merely be tied for first.”

Hansen said, “Not only do electric vehicles not emit greenhouse gases, which contribute to manmade climate change, but they also don’t emit nitrogen oxides, one of the ingredients for ground-level ozone pollution, the most common pollutant (required to be measured by the Environmental Protection Agency).” Air pollution, he said, is the number one environmental factor for premature death and disease.

Gasp recently joined with the Southern Environmental Law Center and Energy Alabama in asking the Alabama Department of Economic and Community Affairs to allocate a portion of the state’s Volkswagon settlement funds toward EV charging stations and electrification of public transit.

Fees Around the Country

Twenty states have fees or taxes on electric vehicles or hybrids or both. Oklahoma had a fee, but a court threw it out. November 2018 figures from the National Conference of State Legislatures show Louisiana and Florida had no additional fees on EVs or hybrids. Last year, Mississippi passed a law calling for $150 annual fee for EVs and half that for hybrids. South Carolina charges a $120 biennial fee for any vehicle operating on a fuel other than motor fuel; hybrids are assessed $60 biennially.

Tennessee’s 2017 legislature passed a fee of $100 annually for EVs. And Virginia has maintained a $64 annual license tax for alternative fuel or electric motor vehicles; hybrids are excluded.

Georgia has a high fee. In 2015, its legislature passed a $200 annual fee on vehicles fueled solely by an alternate fuel, including electricity. In addition, it did away with a $5,000 tax credit for purchasers of EVs. The effect of the dual-whammy was immediate. In the previous year 10,500 EVs were sold in Georgia; in 2017 the sales dropped to approximately 2,000.

However, comparing Alabama’s proposal with fees and taxes of other states is not easy, according to the Alabama Clean Fuels Coalition, a nonprofit group that lobbies for alternative transportation fuels and advanced technology vehicles to lessen dependence on foreign oil.

The group’s chairman and president, Phillip Wiedmeyer, said many of these fees are included in larger transportation funding packages that affect gas taxes, vehicle registration fees, or other revenues. “There are a multitude of taxes that support various initiatives. While Virginia charges $64 a year, that was passed as part of a package for state taxes, not all of it related to roads.”

Wiedmeyer said the $150 proposed fee on electric vehicles in Alabama “is pretty close to what the average gasoline-powered vehicle would pay on an annual basis from purchases of gasoline.”

Alabama’s proposed 10-cent per gallon gas tax would be phased in over three years and then indexed to construction costs. The state’s gas taxes were last raised in 1992.

Alabama’s Stake

Alabama has a stake in the growing segment. The Mercedes-Benz plant in Tuscaloosa County is projected to manufacture electric vehicles starting in the 2020s, with a plant in Bibb County slated to supply battery packs for the new line of autos.

As of October 2018, more than 1 million electric vehicles had been sold in the United States. E&E News called it “a small but significant step toward decarbonizing the transportation sector, the country’s largest and fastest-growing source of planet-warming emissions.”

In 2018’s third quarter, automakers sold a record 110,000 EVs, up 95 percent year over year. Still, the electric vehicles are only a little more than 1 percent of the nation’s vehicles.

Alabama lags most states in EV sales. The vehicles were 0.44 percent of all cars sold in the state in August 2018.

Wiedmeyer’s group, which has not yet taken a stand on the pending gas tax bill, estimates there are now as many as 3,000 registered in the state.