CA - AB1591 - $165 flat fee for zero-emission vehicles

TimLee said:

The tax on fossil fuels on a per gallon basis was actually one of the more intelligently designed tax mechanisms.
It did have shortcomings in that it was regressive on the lower income persons driving older less efficient vehicles.
But it appropriately taxed Hummer drivers more.
It never taxed large trucks appropriately based on their damage to the infrastructure.
And as vehicles became more efficient, revenue fell as it was not indexed to the ongoing need for infrastructure [maintenance] funding.
So it had some shortcomings.

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You're confounding two separate ideas (taxing and spending) here. Yes, the tax on gasoline per gallon is a great tax - as I said above - because it discourages consumption. In the same way, taxing cigarettes is a great tax. But what's stupid is tying the gas tax revenue to highway infrastructure. It makes no practical difference - if gas tax revenue is greater than infrastructure needs, legislators would just "borrow" from it anyway, while when gas tax revenue isn't enough (the usual case) legislators make up the difference with the general fund anyway*. At least that's what the legislators should do, but creating this false pairing gives them the chance to sound off about falling gas tax revenue and try to invent new taxes, even when the general fund is overflowing!

But to say everything should all come out of general revenue is a stupid idea.

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We elect representatives specifically to perform the job of allocating money from the general fund as needed. What's so stupid about expecting them to do their jobs, and holding them accountable when they don't?

*If this still isn't clear, it helps to do the math:

Say infrastructure spending needs are $1B, Gas tax revenue is $500M, and general fund is $100B.

In "Case A", gas tax revenue is tied to infrastructure spending. So the remaining needs are $500M, which has to come from the general fund, leaving $99.5B for other things.

In "Case B", gas tax revenue goes into the general fund like any other tax, giving $100.5B. Then infrastructure spending comes out of the general fund like any other spending, leaving $99.5B for other things.

There's no real difference between Case A and Case B! The only difference is that in Case A politicians whine about having to spend from the general fund and try to enact new taxes, while in Case B they just go about their business and see each of gas tax revenue and infrastructure spending as just another line item in the budget.

I understand why there's a general fund and categorical funds. I serve as an elected official myself and need to allocate money in this same manner, but to say that just because something comes from one fund and it doesn't necessarily impact the other, is complete insanity. We are constantly granted money from the state as categorical funding, but when we choose to use it toward said "categorical" program, we need to make sure that once the program is over we can sustain the jobs, re-route assets, etc... Plus it all counts to our same budget. We don't get to run a deficit in one area and then just say "Oh but there was categorical money for other stuff." You have to think of these things as total outgo of funds. I remember an article that discussed how Yosemite national park got a government grant to install solar power in many of their park facilities?! What!? So a government entity got a grant from the government? And we are supposed to think "Oh that's good, they got a grant for it, they saved money!"

I'm not sure if this has come up, didn't read from the beginning.....

If the gov't has decided at both the Federal and (some) state level that EVs should be subsidized and there is a goal (at least Federally) of 1 million EVs on the road which they aren't going to make then any EV tax is down right ridiculous. Many people have said they have no problem paying their fair share but happily take $7500+ from the Gov't to pay part of the cost of their vehicles.

At last count I heard there are about 400,000 EVs in the US, at $165 a year that's $66 Million a year back compared to $3 Billion in Federal tax credits alone. The problem with that isn't about it being fair it's that it's such a small amount of money that it's almost not worth even debating. For most of the new EV car buyers it's a small drop in the bucket but just like gas tax tends to hurt the poor most, this is the kind of fee that will keep the poor out of used EV ownership when in reality there are a tons of benefits in reliability and cost of ownership to them.

If you wanted to raise $66 Million more from gas taxes of the 256 Million cars in the USA (2013 stat) you'd only have to charge a fee of 25cents per car. If you were to raise gas taxes 3 cents/gal you'd get $2.86 Billion (I gave a very conservative 11,000 miles per year and 30mpg avg for that so the real number would be more).

It's hard to argue with the way gas tax is set up. It can discourage overconsumption, it pays more for road use for those that use the road more. It rewards people who buy the latest hybrid tech and it gets more money from the rich who chose to drive inefficient cars.

I would hazard a guess that any EV user fee has more to do with politicians being upset because they didn't want to give subsidies in the first place than it has to do with bringing in money.

I think the best way to balance a gas tax for environmental purposes and road maintenance without hurting the poor more would be a tax on diesel fuel. After all they power the heaviest vehicles that pollute the most and drive the most causing the most wear and tear on the roads. Yes it affects the cost of all goods from shipping but since gas prices have crashed how much savings have you seen in all the other goods? I think many places have been pocketing the savings. (just a theory)

Personally speaking, if the government wants to raise revenue and simultaneously drive further EV sales, they should raise the gas tax. With gas prices as low as they are and with no significant rise in site, an increase of the gas tax would serve a number of purposes (1) Increase revenue, (2) Increase the cost benefit of EVs, thus driving more sales, (3) Not penalize EV drivers with some silly tax that counteracts an existing rebate.

Sure, I get it, when the roads are all full of EVs in the next decade, you'll need some way to offset the loss of gas taxes, but when you're at a point where we haven't even reached 5% adoption in the US, we aren't anywhere close to this.

minispeed said:

I would hazard a guess that any EV user fee has more to do with politicians being upset because they didn't want to give subsidies in the first place than it has to do with bringing in money.

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Bingo. It's that, or political posturing, or both. Making those "tree hugging liberals" pay their "fair share" may play well with some voters. (By the way, we are not all liberals here. Being a climate realist and also wanting cleaner air doesn't automatically make one a liberal. We need to de-politicize these things.)

fooljoe said:

... You're confounding two separate ideas (taxing and spending) here. Yes, the tax on gasoline per gallon is a great tax - as I said above - because it discourages consumption. In the same way, taxing cigarettes is a great tax. But what's stupid is tying the gas tax revenue to highway infrastructure. ...

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We clearly disagree.

Politicians are not very disciplined.

In many states coffers are not overflowing.
In most states the cost of higher education is sky rocketing and % the state pays are at lowest in decades.

In CA in many years the politicians have been totally deadlocked and unable to pass a budget. Has also been the case at US Federal level.

Having a revenue stream tied to a certain use provides helpful discipline.

They just need to index the tax to keep it supplying the needed revenue.

finman100 said:

Am I not taxed for the electrons I use? Isn't the gasoline tax put in the same coffer as all other taxes and then road repairs, etc. are paid from the general fund? Would Electric utilitiy taxes end up in a general fund? I need to Google these things unless someone much smarter than me answers. Thanks!

PS I'd 'like' to pay my fair share of road usage. but 'fair' is SOOO different to too many people. The large trucks (personal use , not the 18 wheelers) would argue that they are 'working vehicles' and need a tax break, where your little EV is freely enjoying the same road(s). I get that feeling anyway.

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I won't claim to be any smarter than you, but I happen to work in an industry that provides me with information on this topic. No, gas taxes are not put in the general fund with all other taxes, they go into a special fund for transportation infrastructure. At least in Georgia and in most states they do. In Georgia those funds are now protected against being "raided" to supplement shortfalls in the general budget. That isn't the case in all states (I'm looking at you Kansas). The federal gas tax is also protected, although outlays generally exceed revenues so Congress must occasionally supplement the highway trust fund with money from the general fund.

I agree with you that "fair" is subjective. However I would assert that paying zero is not fair, so no fee at all for EVs is not fair. We can definitely argue over what the fee should be and how it should be collected, but IMO there should be some fee. And BTW those large 18 wheel trucks pay far more in gas taxes on a per gallon basis than anyone driving a personal use vehicle.

grandizer52 said:

DanCar said:

Bufordleaf said:

... but as EV drivers we need to step up to the plate and pay for the transportation infrastructure we use...

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I think it is more important to help the polluters to stop polluting by increasing the taxes on polluting.

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So as for stepping up to the plate and help with this GOV slush fund that gets borrowed from for other programs...but never gets reimbursed cause the GOV borrows from hand to hand, then says there's no $$$ left in the budget from taxes that is suppose to go into road bridges...etc,

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Not sure about Hawaii, but in my home state of Georgia the gas tax goes into the transportation fund and by law can't be raided or borrowed for anything else. Not all states are set up with those protections, but many are and IMO all should be.

Nubo said:

Bufordleaf said:

Many of you may not want to hear this, but as EV drivers we need to step up to the plate and pay for the transportation infrastructure we use. Roads and bridges are not cheap, and as others have noted we need to spend much more on maintaining them to a safe standard than we currently spend in total, even without adding new lanes or roads. I'm in Georgia, I pay a $200 annual fee on my Leaf, and I'm totally OK with that. ....

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And I'm down for paying a FAIR share. But there's nothing fair about paying a flat tax when others are paying a use-tax. And the gasoline tax is unfair to begin with because it punishes people who can't afford newer more efficient cars. A system needs to be developed to collect this revenue fairly whatever vehicle type you're using. In my opinion, roads are part of the commons and benefit everyone regardless of whether they drive a little or a lot or not at all. Roads should be paid for out of the general budget and taxes collected accordingly.

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I agree with you that it seems odd for most to pay a use tax (gas tax) while some pay a flat tax. I think this is an example of gov't not keeping pace with technology and eventually we will work something out that seems more equitable across the board. I personally don't want the gov't tracking my miles driven but I know many people don't have a problem with it. I prefer a sales tax that is dedicated to transportation infrastructure. After all, the more stuff you buy the more you are using the roads, and therefore the more you would pay. Seems like a simple and fair way to charge people based on their level of use.

DanCar said:

Bufordleaf said:

... but as EV drivers we need to step up to the plate and pay for the transportation infrastructure we use...

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I think it is more important to help the polluters to stop polluting by increasing the taxes on polluting.

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That's fine, then lobby for a pollution tax. It may fly in California, as for the other 49 states it would likely not. In Georgia it would go over like a pregnant nun.

Bufordleaf said:

grandizer52 said:

DanCar said:

I think it is more important to help the polluters to stop polluting by increasing the taxes on polluting.

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So as for stepping up to the plate and help with this GOV slush fund that gets borrowed from for other programs...but never gets reimbursed cause the GOV borrows from hand to hand, then says there's no $$$ left in the budget from taxes that is suppose to go into road bridges...etc,

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Not sure about Hawaii, but in my home state of Georgia the gas tax goes into the transportation fund and by law can't be raided or borrowed for anything else. Not all states are set up with those protections, but many are and IMO all should be.

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we have General Excise Tax GET, everything you pay for, there's a skim for this new rail that hawaii had 3 tries from the federal gov to get fully paid for. now the state with the absolute worst roads in the country, is trying to patch holes while building this rail,,,a month ago, the GET got raided for education...you ever think your state is messed up and corrupt, come to hawaii and see mafia/broken/cronyism...come to the aloha state...
oh, and we have some Electric Car's here

Bufordleaf said:

No, gas taxes are not put in the general fund with all other taxes, they go into a special fund for transportation infrastructure. At least in Georgia and in most states they do. In Georgia those funds are now protected against being "raided" to supplement shortfalls in the general budget. That isn't the case in all states (I'm looking at you Kansas). The federal gas tax is also protected, although outlays generally exceed revenues so Congress must occasionally supplement the highway trust fund with money from the general fund.

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None of this matters; only total taxation and total expenditures matter. If $1 billion goes into a "special fund" for needed transportation infrastructure, then all that means is $1 billion less must come out of the general fund. But if that $1 billion went straight into the general fund instead the money remaining after paying for transportation would be exactly the same.

Now, if that special fund was for something that wasn't needed I suppose it could mean something, but as you point out in the case of transportation funds outlays almost always exceed revenues. Special funds in general have little to no effect on the expenditures to which they're dedicated.

[/quote]None of this matters; only total taxation and total expenditures matter. If $1 billion goes into a "special fund" for needed transportation infrastructure, then all that means is $1 billion less must come out of the general fund. But if that $1 billion went straight into the general fund instead the money remaining after paying for transportation would be exactly the same.

Now, if that special fund was for something that wasn't needed I suppose it could mean something, but as you point out in the case of transportation funds outlays almost always exceed revenues. Special funds in general have little to no effect on the expenditures to which they're dedicated.[/quote]

I respectfully disagree. IMO it matters because the more any gov't uses a "general fund" the more they can tax us and hide the expenditures. Having a dedicated, protected revenue stream and fund for things like transportation infrastructure increases transparency. We do need to make sure the law is setup to protect the fund, and I would be in favor of also making it law that they can't supplement from the general fund. If the method of taxation is not suffiicient anymore (like gas taxes) then create a new method of sending revenue into that fund. But again, dedicated to that purpose so we all know when I pay xyz tax it goes into xyz fund and gets spent on xyz only. I would like to see more of this, and less general fund shenanigans from my state and federal gov't.

Of course I really wish the federal gov't would just get out of transportation funding for anything other than the interstate system and let the states handle the rest. But that's a pipe dream.

I like the pollution tax idea. Not willing to stop spewing crud out your tailpipe? (i'm really looking at you coal-rollers) then pony up. Want to be part of the solution of clean air? Then reward me. Most all people are motivated by money. Kinda separates us from the animals. Show people there is a painful wallet grab for having ICE cars and most people will want to do the cheaper thing, regardless if they WANT to pollute less, but instead, because it ain't cheap to keep spewing when alternatives are better in all ways.

People continually tell me I'll never re-coupe my money spent on a Prius or my current Leaf, using nothing but cost. Well, I am not thinking about ONLY that. Using less and polluting less is my mantra (sp?) And electric drive is superior in smoothness and quiet compared to ICE cars.

People just want to spend less and THAT is how to motivate change from ICE to EV. buck a gallon of gasoline is not going to do it.

Bufordleaf said:

... I prefer a sales tax that is dedicated to transportation infrastructure. After all, the more stuff you buy the more you are using the roads, and therefore the more you would pay. Seems like a simple and fair way to charge people based on their level of use.

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That will not work for electricity because the vehicle use isn't metered separately.

And trying to charge all of it at vehicle purchase isn't fair.

To be fair it needs to be based on miles driven.

Bufordleaf said:

I respectfully disagree. IMO it matters because the more any gov't uses a "general fund" the more they can tax us and hide the expenditures.

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Despite your opinion, the empirical evidence shows that the opposite is true (did you see the paper I linked to?) Special funds in general lead to larger government (i.e. more taxation) and have little effect on the expenditures to which they're dedicated.

Basically the whole reason these artificial constructs exist is as a sales technique to get new taxes passed. Ask Joe Sixpack if he'd like to pay a tax on his gas and he'll of course say "Hell no!" But ask him if he thinks he should pay for roads and he'll say "sure I guess, mumble mumble fair share..." The end result is he ends up paying more taxes while the government goes on paying for roads at exactly the same levels that they would have anyway, accounting gimmicks notwithstanding.

And then when the gas tax revenue inevitably falls short of what's needed to pay for roads, it gives politicians an excuse to come back and complain that they need new taxes. Case in point, AB1591 comes up now in California proposing a new tax on EVs, despite the fact that California is currently running a surplus.

fooljoe said:

despite the fact that California is currently running a surplus.

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I thought you arguing against budget tricks

Edit: Or this one if you think that biased

jpadc said:

fooljoe said:

despite the fact that California is currently running a surplus.

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I thought you arguing against budget tricks

Edit: Or this one if you think that biased

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You're making a very common mistake here by confusing debt and deficit - these terms are not the same. Deficit/surplus refer to an individual year's budget, while debt (what your links talk about) is a long term obligation.

There's nothing wrong with carrying a debt so long as a payoff plan is in place and the yearly obligations (i.e. interest) are met in each year's budget (and they are, at least for now). Now, whether California has a good long term plan to address debt is another matter, and completely beside the point here.

What I'm arguing against is unnecessary and poorly thought-out taxation. These are the questions that concern me: 1) Does California need a new tax? And 2) If new taxation is needed, is a flat tax on EV ownership a good choice of taxes to implement?

If you think the answer to (1) is yes, the obvious retort is why do we need a new tax when we have a (current year and near term expected) budget surplus? If you think the answer to (2) is yes, then I'd point out that California is at the same time offering a $2500 incentive to EV purchases - how does it make sense to try to stimulate the EV market with one hand and penalize EV ownership with the other?

I'd also point out that a flat tax is completely unreasonable if it's meant as a "road usage" tax, since actual usage varies greatly among drivers. And if a new road usage tax is to be implemented it should apply to ALL cars, not just EVs. Further, this is yet another regressive tax that will have a disproportionate impact on the bottom end of the EV market - Tesla owners couldn't care less about $165/year, but this could be an absolute deal breaker for a student considering a $7k used Leaf. If new taxation is really needed, something like an income or property tax would make much more sense.

fooljoe said:

You're making a very common mistake here by confusing debt and deficit - these terms are not the same. Deficit/surplus refer to an individual year's budget, while debt (what your links talk about) is a long term obligation

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No, I'm not confusing them at all, Unfunded pension liabilities are not just old debt (but they do increase and become new debt), they are the failure to set aside enough money out of each year's budget to cover legally required future payments. So out of THIS year's budget California is NOT setting aside the amount of money they KNOW they will need to fully fund the new pension obligations for state employees and by not doing so they will create more debt. All that is in this year's budget is the money they need to pay out this year to current retirees, but that is well short of the reality of what they should be setting aside. If the state put the money aside they should THIS year for the new obligations that they are incurring THIS year for current employee pension plans, there would be no surplus. Its an accounting trick which creates more debt.

EDIT: As for your other points, I've already covered all that in earlier posts, but in short review:, CAs funding of EVs is welfare to the rich and privileged at the expense of the poor and underclass and does far less to clean up the environment than actually trying to use HOV lanes to reduce the number of cars on the road and stalled traffic which dramatically increases the pollution created by each car. So its just bad policy all the way around.

jpadc said:

out of THIS year's budget California is NOT setting aside the amount of money they KNOW they will need...

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Like I said, I don't necessarily agree with California's long term planning, but this is wayyy off topic. CA has extra money in this year's budget. Should we spend it on infrastructure, or set it aside for pensions, or do something else entirely? That's what we elect people to decide. Does any of this mean we need to tax EVs? No.

EDIT: CAs funding of EVs is welfare to the rich and privileged at the expense of the poor and underclass and does far less to clean up the environment than actually trying to use HOV lanes to reduce the number of cars on the road and stalled traffic which dramatically increases the pollution created by each car. So its just bad policy all the way around.

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Again, you're getting off topic. Whether you agree with it or not, it's clear that CA wants to incentivize EVs. Whether that's bad policy or not is certainly up for debate - go ahead and find another thread if you want to do that. What is clearly bad policy is creating a new tax that penalizes EVs while trying to incentivize them elsewhere.