My dad just bought a Tesla. It’s his first ever brand-new car, has heated leather seats, a 16-inch screen, and can be unlocked and started from an app on his phone. But the part he’s mostly excited about? Not paying for gas. My sister just bought a Toyota hybrid. A couple weeks ago, she drove from Lynchburg, VA to Charleston, SC and back again (almost an 800-mile round trip) and only fueled up once. It was, she says, “awesome”.
Scenarios like this are more and more common as hybrid and electric vehicle technologies become more sophisticated and affordable. While the reduced emissions are undoubtedly good for air quality, the reduced gas tax revenues put additional strain on a struggling infrastructure system. The answer? A Road Usage Charge (RUC).
Since January 2020, the RUC has been a voluntary system in Utah whereby EV drivers pay a per-mile charge in lieu of additional registration fees up to a maximum $130.25 in a year. At the current rate of 1 cent per mile, an electric vehicle user would have to drive 13,250 miles to break even with the registration fee. However, any miles driven over this would not be charged; the limit would be $130.25 for the year. Assume the typical car in Utah gets 25 miles to the gallon and drives an equal 13,250 miles in a year. With the current state and federal gas tax rate of $0.547 per gallon, they would pay about $289.91 in gas tax. This is already more than what EV owners would pay, but there is no limit to how much they might pay if they were to drive additional miles. In the future, the RUC program would account for all miles driven in a year to fully finance the wear and tear EVs put on the roads. There is no reasonable argument that EV drivers are entitled to pay less for the roads they use than other drivers.
As of June 2023, Utah is one of only three states where the RUC program is actually generating revenue and working to close the gap between gas tax revenues and infrastructure needs. 9,125 new EVs and 10,595 new hybrids were registered in Utah between 2022 and 2023. Through December 2022, only 6,534 cars were enrolled in the program, meaning there is room to expand this program further.
The gas tax risks becoming a regressive tax, whereby the wealthy buy efficient or electric vehicles and minimize their tax liability, and those who can’t afford new cars pay high costs at the pump. With decreasing revenues dedicated to infrastructure, local, state and federal governments could seek poorly designed and punitive methods of generating these revenues which are not directly related to road usage.
Your Utah Taxpayers Association supports properly designed user fees and believes that all road users ought to contribute to their construction and maintenance. We will continue to encourage the expansion of this equitable program in keeping with our criteria that those who pay a tax should benefit from its expenditure.