California electric vehicle owners are dodging taxes — and disaster is looming | Opinion

California’s electric vehicle owners, who are disproportionately wealthy, are also tax dodgers. Ironically, the money the state should be collecting would battle — of all things — climate change, by funding transit and transportation projects.

The state has long funded transportation through a tax on gasoline, since its use was once ubiquitous. Electric vehicle owners get to skirt that tax. And because Gov. Gavin Newsom and the Democratically-controlled California Legislature haven’t found a substitute way to collect the necessary money, the taxes are now disproportionately falling onto lower-income residents.

For a governor who likes to crow about how progressive California’s tax structure is, he is not walking the walk when it comes to vehicles without gas tanks.

A train wreck is looming somewhere on the horizon on how the state maintains and improves its transportation system. If the state met its goals to dramatically shift our vehicle fleet to all-electric, half of this revenue source could be gone in 10 years, according to projections by the California Legislative Analyst’s Office.

Opinion

For Sacramento and every region of the state, gas taxes are the primary source of money to maintain local roads. Sacramento County roads on average barely rate above “poor” as it is. Every Californian who abandoned the internal combustion engine simply makes the problem worse.

Why the political gridlock in Sacramento on fixing this problem? Because two logical solutions could get some lawmakers unelected.

Increase the gas tax

“There are two uses of taxes,” said Christopher Thornberg, head of Beacon Economics. “One is for revenue, the other is to alter decisions for public policy purposes.”

Currently, the state’s gas tax is 60 cents a gallon, which generates about $8 billion annually for state and local transportation projects. The state has a stunning 31 million registered vehicles. Each car, on average, generates about $260 a year in taxes via gasoline to fuel the state’s transportation system.

In the short run, California could increase gas tax revenue by increasing the tax itself. There is “no way you are going to go all electric without high gas taxes,” said Thornberg, who, in his next breath, evaluated the politics of this approach.

“Forget about it,” he said. “This is clearly a problem from a competitive/tourism/trade perspective.”

Tax driving differently

There’s nothing sacrosanct about funding transportation based on how much gas a Californian buys. How about collecting the same money based on how many miles each and every one of us drive?

This idea is not new. The California Department of Transportation has been toying with versions of a “road charge” program for years. Another pilot study is now under way, enticing Californians with gift cards of up to $400 to test how to collect taxes based entirely on miles driven or a tax that’s adjusted up or down based both on miles and the car’s fuel efficiency.

This concept “has been discussed in Sacramento multiple times, with no progress made,” Thornberg said.

Why? The politics of this are nearly as brutal as jacking up the gas tax.

Do you want your car to automatically tell the Department of Motor Vehicles how many miles you have driven? If government gets under the hood to follow your driving behavior, is your privacy somehow violated?

Taxing drivers based on how much they use the state road system, which sounds fair at one level, is an economic injustice at another. Many Californians who are prisoners of long commutes do so because they can’t afford a home close to their jobs.

Legislators “can’t bear to put higher taxes on lower-income families,” Thornberg said. “Sacramento has yet to comprehend that you can’t make an omelet without busting a few eggs.”

One Sacramentan, Kevin Bewsey, is a big fan of this mileage-based tax idea.

“In the long term, a usage-based fee makes more sense and is much more equitable,” Bewsey said. In the short run, “Increase the vehicle fees on electric and hydrogen vehicles. I say this as an owner of an electric vehicle, who wants to pay their fair share.”

Bewsey’s altruism is also grounded in the pragmatism of his day job. He happens to lead the Sacramento Transportation Authority, which distributes local sales tax dollars to local transportation projects. The STA has launched a much-needed public discussion locally on how to fix our decaying road system given that existing funding sources are woefully insufficient.

In the meantime, the Democratic leadership in this state has placed California in the worst of both worlds when it comes to taxes for transportation: The gas tax isn’t high enough to provide the necessary money for our transportation needs or to motivate Californians to buy electric cars, and nobody in the halls of power is in a hurry to do anything about it.

When it comes to tough choices to deal with climate change, California simply isn’t leading.