Brian Kingston, head of the Canadian Vehicle Manufacturers’ Association, which represents the Detroit Three in Canada, basically took the words right out of my mouth.
“The industry is bringing 120 electric vehicles to market in the coming years. A tax is very counterproductive. I’m very discouraged by it.”
The problem governments face is maintaining fuel-tax revenue in the face of generally decreasing litres-per-100-km consumption and looming mandates to drastically cut greenhouse-gas emissions such as carbon dioxide. CO2 reduction is in direct proportion to the fossil fuel not burned. Less burned means less tax collected. According to the Canadian Fuels Association website, the average amount of total federal and provincial tax per litre of fuel in Canada is 42 cents. If consumption falls by half to meet greenhouse-gas targets, the tax loss for infrastructure would likely be devastating.
The Saskatchewan government’s rationale is that EVs don’t burn fuel, so a separate tax must be collected. One could argue that if electricity is taxed then EV owners are already paying a “fuel tax” for charging their vehicles. But a full charge for an EV might only cost a few extra dollars on the power bill, while a gasoline pickup could swallow 100 litres of fuel. About $42 of that fill-up would be tax. Clearly the revenue is lopsided.
Enter the government of California, a state known for its environmental focus and rapid pace of EV adoption through a robust rebate program. Recognizing it was barreling toward an eventual fuel-tax collapse, the state began looking at a per-mile tax for all vehicles.
In 2017, it undertook the California Road Charge Pilot Program that “sought to recruit 5,000 vehicles to report miles traveled, pay a simulated road charge for each mile driven and provide valuable feedback on the overall pilot program operations.” It’s unclear whether this approach would entirely replace the fuel tax, but that seems unlikely.
The miles driven were reported in various ways — from manually to electronically — and the simulated fee was collected various ways (pay at the pump was considered a viable solution). According to the study, participants gave the program an 85 per cent approval rating. The 97-page “California Road Charge Pilot Program 2017 Final Report” is available online and also details hurdles such as data security and compliance.
Regardless of the study’s specific findings, such thinking applied to a similar brewing tax issue in Canada could spawn a reliable and standardized user-pay revenue stream for governments — no matter what propulsion system a vehicle has — and prevent the perception that EV owners are being singled out and penalized for trying to consume less.
