How Much Should Hybrids and Electric Vehicles Contribute to Roadway Funding?

Should electric and hybrid vehicles owners pay fees to help fund the nation’s roadways?

UT’s Howard H. Baker Jr. Center for Public Policy addresses this funding debate in a new policy brief titled “How Much Should Hybrids and Electric Vehicles Contribute to Roadway Funding?”

According to the US Energy Information Administration, gasoline consumption accounts for 47 percent of total petroleum consumption within the transportation sector. But decreases in fuel consumption associated with hybrid and electric vehicles result in gasoline tax revenue losses for states.

Matt Murray, director of UT’s Baker Center and associate director of the Boyd Center.

“Present roadway funding models are based on gasoline tax revenue, but these types of vehicles pay a lesser share,” said Matt Murray, director of the Baker Center. “Although these vehicles have unique benefits and represent a small percentage of cars on the road, states are faced with addressing this revenue loss.”

Currently 10 states have passed legislation requiring hybrid or electric vehicle owners to pay annual fees on top of regular registration fees. Most of these states simultaneously offer incentives for such vehicles, including tax credits and rebates.

In Tennessee, fuel taxes are the state’s primary revenue source for roadway funding, but it has the 11th-lowest gasoline tax rate in the country. Tennessee’s last gas tax increase—four cents per gallon—was in 1989.

The full report provides a brief overview of how states incorporate hybrid and electric vehicles into their transportation funding structure as well as equity impacts, incentive programs, and how those fees compare to estimates of lost revenue. The report concludes that if these vehicles are to be taxed, they should pay roughly the same that a regular gas-powered vehicle would pay in gasoline taxes.

Additional researchers on the report include Rebecca Davis, a PhD candidate in UT’s economics department and a predoctoral fellow in the National Bureau of Economic Research, and Jilleah Welch, a research associate at the Baker Center.

CONTACT:

Nissa Dahlin-Brown (865-974-8681, nissa@utk.edu)

Tyra Haag (865-974-5460, tyra.haag@tennessee.edu)