TX Raises Annual Car Registration Fees on EVs by $200

In a bid to offset diminishing revenues from gas taxes caused by the increasing popularity of electric vehicles (EVs), Texas Governor Greg Abbott (R) has signed into law Senate Bill 505 (SB505) which raises the annual vehicle registration fee on EVs by $200 in a move to ensure that all drivers contribute fairly to the maintenance and improvement of Texas' transportation infrastructure.

The enactment of SB505 reflects the state's recognition of the challenges posed by the rise in electric vehicles, which do not pay the state's $.20 per gallon gas tax that funds road repairs and construction projects. As EVs gain popularity, the traditional revenue stream derived from gas taxes has seen a significant decline, necessitating alternative measures to maintain the state's transportation system.

Under this new law, all electric vehicle owners in Texas will be required to pay an extra $400 when registering a new EV, but the initial registration covers two years. Registration renewals will increase by $200 per year.

Texas splits $0.05 per gallon of the gas tax revenues for public schools and the remaining $0.15 for the state's highway fund.

Supporters of SB505 argue that the legislation promotes equity and fairness among vehicle owners, ensuring that everyone who utilizes the roadways contributes to their upkeep. As electric vehicles become more prevalent, it is imperative to find a sustainable solution that guarantees a stable source of revenue for infrastructure funding.

However, critics of the law argue that it could discourage individuals from adopting electric vehicles, hindering the state's efforts to promote cleaner transportation alternatives and combat climate change. They contend that the focus should be on incentivizing the adoption of EVs rather than imposing additional costs on their owners.

Consumer Reports magazine called the new law a "punitive tax on people who choose to go electric."

In response to these concerns, the Texas legislature plans to allocate a portion of the revenue generated from the increased EV registration fees towards promoting electric vehicle adoption and establishing a robust charging infrastructure throughout the state. By doing so, lawmakers aim to strike a balance between offsetting revenue losses and encouraging the transition to cleaner transportation options.

Texas joins several other states that have implemented similar measures to address the declining gas tax revenues caused by the rise of electric vehicles. These legislative actions reflect the ongoing evolution of transportation systems and the need for innovative funding mechanisms that adapt to changing technologies.

In California, a pilot program is already in place to test the effectiveness of a mileage tax to replace our current gas tax scheme. California current adds $0.654 per gallon in state gas taxes, in addition to the federal government's total of $.164 per gallon in excise taxes.

Our own regional transportation agency, the San Diego Association of Governments( SANDAG) has previously floated a mileage tax to replace help fund local transportation projects, but removed the proposal from its regional plan after vocal opposition from the public.

The arguments for replacing gas taxes with higher registration fees or mileage taxes are complicated.

Opponents of gas taxes argue that they penalize lower income working families who cannot afford newer fuel efficient gas powered cars and therefore use more gas per mile driven, much less be able to purchase more expensive electric vehicles, but that mileage taxes also penalize those families who, on average, drive further to work because they live in more remote communities where housing is more affordable.

But proponents of higher registration fees or mileage taxes argue that electric vehicle owners are escaping the payment of gas taxes that currently fund highway construction and maintenance and passing the entire burden onto gasoline-powered car owners, and a disproportionate share on under-served communities.

As Texas moves forward with the implementation of SB505, the state will closely monitor the impact of the law on electric vehicle adoption rates, revenue generation, and the overall condition of its transportation infrastructure. The aim is to strike a delicate balance between supporting sustainable transportation options and ensuring a reliable source of funding for vital road infrastructure projects.

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