Texas May Be Where Tesla's Headquartered, but Lawmakers Want To Tax EV Owners More

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Tesla and its CEO moved from California to Texas two years ago. The automaker was having a hard time dealing with all sorts of regulations, while Elon Musk benefitted from Lone Star State’s friendlier billionaire tax scheme. Besides that, the executive was also closer to SpaceX’s Boca Chica launch site after the move. But something might soon change – for the worst.
If you own a Tesla or any other all-electric vehicle, you’re helping the environment by generating a smaller individual carbon footprint and by not making a lot of noise. But you’re also doing a thing that irks elected officials – not paying the famous gas tax because… Well, your "green" vehicle doesn’t need fuel! But that may be changing soon.

Texas may soon put more financial pressure on environmentally-conscious people.

But first, let's see why this new tax can be considered just a tad bit outrageous. Texas receives $0.20 for every gallon ($0.05 per liter) of gas or diesel drivers buy. This value has not changed since 1991, despite inflation climbing in the past three decades. The money coming from the drivers' pockets is generally used to keep the state’s roads in at least an acceptable condition. But with EVs becoming increasingly popular, fewer people are stopping at the gas station. Thus, Texas is losing important revenue.

However, EV drivers can't be exempt from paying their fair share of taxes. So, the Lone Star State had to figure out a way for people driving zero-tailpipe emission cars to contribute to the public budget. They decided to look around for the right answer instead of just adopting a random tax.

That's why, three years ago, the Texas Department of Motor Vehicles (DMV) worked with the state’s Department of Transportation, the Public Utility Commission, the Department of Public Safety, and the Commission on Environmental Quality to figure out how much EV drivers should pay. The Department of Transportation discovered that for every new electrified vehicle (full or plug-in hybrid) that replaced a fossil fuel-powered car, the state lost approximately $80 per year in taxes. In the case of EVs, the loss grew to $100 per year.

The conclusion the study reached was that EV owners should pay $100 to cover the fact that they’re not paying the state’s gas tax.

But last year, legislators wanted to double the yearly tax. Fortunately, that initiative failed.

However, lawmakers are now back at it. The Texas Senate already voted on a $200 yearly tax for EV owners and now the House of Representatives must debate the bill known as HB 2199 before it can reach the governor’s desk.

For a yearly tax, that amount may not seem like such a big financial effort for most EV owners. But when compared with what internal combustion engine vehicle owners pay ($108 for trucks, and $63 for cars), the $200 tax feels a tad bit excessive.

Moreover, as the gas tax is applied on a per-gallon basis, it’s fairer for any Texas driver because they don’t have to pay it all at once.

The worst thing, though, is that a Model 3 owner would have to pay $400 when registering their new EV because brand-new cars are initially taxed for two years. With inflation leaving marks all over the economy and companies freezing hiring, it’s not hard to understand why many people might not have so much money to spend at once.

But since Texans might be reluctant to a per-mile traveled tax, EV owners could end up paying a lot more than drivers of conventional cars. Right now, it’s in the hands of Texas lawmakers who represent people living in the state that is the largest oil producer in the U.S.
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 Download: Texas' Study on EV Tax (PDF)

About the author: Florin Amariei
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Car shows on TV and his father's Fiat Tempra may have been Florin's early influences, but nowadays he favors different things, like the power of an F-150 Raptor. He'll never be able to ignore the shape of a Ferrari though, especially a yellow one.
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