The gas tax system is broken. Are electric cars to blame?

Both state and federal gas-tax revenues are plummeting, and electric cars are emerging as a culprit. Is that fair?

In the face of plummeting gas-tax revenues, both state and Federal, electric cars seem to be emerging as a culprit and a target.

Before we discuss how to fix this ... first, a little Gas Tax 101.

The Revenue Act of 1932 under the Hoover administration instituted a Federal 'excise' tax on gasoline of 1 cent per gallon: the first Federal gas tax.

Eighty-one years later, that tax is now 18.4 cents per gallon--and has remained so since 1997.

In my home state of Maine, the state's additional excise tax on gasoline is 31.5 cents, bringing the total tax to 49.9 cents per gallon. (The national average is 45.8 cents.)

To help put this in perspective, the average national sales tax is 5.6 percent, whereas the national excise tax on gas at  the current average price per gallon is about 13 percent.

Based on an estimated 150 billion gallons of gasoline sold each year in the U.S. at an average tax of 46 cents a gallon, that works out to be combined state and Federal gas-tax revenue of roughly $69 billion.

As well as the Federal income-tax credit for the purchase of a plug-in electric car ($2,500 to $7,500), 20 states at last count currently offer some form of tax relief as incentive for the purchase or use of electric vehicles.

Not a drop of gas

I've now driven an electric car for 9,000 miles and have not bought a drop of gas, nor paid a penny in gas tax. 

Yes, I give back to the environment by driving electric, but I take money from the taxman--which was not my intention in buying the car. It can be considered tax avoidance, which I view as smart personal finance.

Please note that is not tax evasion, which Uncle Sam frowns upon.  As you know, electric cars are green, but would tax policymakers be more apt to say gangrene?

Let's face it: The gas tax collection system is failing--but not because of the tiny number of plug-in cars entering our roads.

Years of Federally mandated increases in fuel-efficiency standards have eaten away at gas-tax revenue. What started as a scratch has now become a festering wound. 

When hybrid vehicles entered the scene, more than a decade ago, the Federal Highway Administration should have addressed the issue.

Unfortunately, as is commonly the case, policy and law did not keep pace with technology.  Governments move slowly, for the most part--consider the sequester debacle.

The American Association of State Highway Officials projects that there will be an average shortfall of $14.7 billion a year in the funds needed by the Highway Trust Fund. 

This is exacerbated by the fact that not all the money collected goes to the roads, since there are other hands in the cookie jar.

The wrong bandwagon?

Michigan and other states have now jumped on the 'tax electric cars bandwagon'.

But this is a Bandaid approach, and it will lead to a fragmented system of reaping highway-repair revenue.  While on the one hand, 20 states give tax breaks for electric-car use, they may begin to recoup those funds on the other hand.

 Traffic

What is needed at this point is a top-to-bottom examination of how highways are funded, and then a standardized and equitable system so that drivers pay their fair share regardless of the fuel they use.

That system may well be a per-mile fee, though how it would be administered is currently the subject of much heated debate: annual odometer readings? over-the-air recording of a car's mileage (but not its routes)?

Still, I'd suggest that electric cars may be stimulating necessary changes in the way highway taxes are levied--and hence are doing more good than harm.

Will they be the antibiotic that cures this disease?

Leave us your thoughts in the Comments below.

Marc Lausier is a retired pharmacist living in the coastal town of Scarborough, Maine.  He is an electric-car advocate and the owner of the first Nissan Leaf sold in his state. He first wrote for Green Car Reports about his car's carbon-dioxide footprint