It’s budget time in the state Capitol. Both the House of Representatives and the Senate have passed their budget proposals, and legislators are now working to reconcile the two bills before the final draft is voted on and sent to the governor’s desk. Among the many differences between these two bills is a provision in the Senate version which increases an existing tax on electric vehicles and adds a tax for plug-in hybrid vehicles.
Under existing laws, electric vehicle owners must pay $130 each year when they register with the state, but the proposed tax would increase this to $230 and add a $115 fee for hybrid vehicle owners. The proposal’s advocates, Senators Jim Davis and Tom McInnis, say the tax is needed to fund the Department of Transportation, since drivers of electric vehicles don’t contribute to the gas tax, which provides 40% of the department’s revenue.
As someone who has written previously on the importance of infrastructure, I recognize the vital need to ensure the DOT has enough money to maintain and improve highways and public transit. It’s true that as electric vehicles grow in popularity, drivers must still contribute back to the roads they’re using. However, increasing taxes on these more environmentally conscious cars sends the wrong message about the state’s priorities, and it ultimately causes more harm than good.
For one thing, according to the NC Clean Energy Technology Center based at NC State, the current tax actually charges these drivers $30 more than the average revenue lost due to electric vehicles. Thus increasing the tax would quite simply be discrimination against people who drive electric or hybrid vehicles.
The deeper issue is that by disincentivizing the purchase of low-emission vehicles like these, the state is contributing to far greater long-term costs for the DOT and other agencies. As an illustrative example, take Highway 12 in the Outer Banks. This road is essential to transit along the islands, but heavy storms can cause it to become impassable, and as a result of this frequent flooding, it routinely has to be cleaned off and fixed. As flooding becomes more common due to climate change, more money and effort will have to go toward maintaining this and other roads.
Transportation isn’t the only sector that’s at risk though. With the start of hurricane season, we can’t help but be concerned that another Matthew or Florence will cause billions more in damage to homes, businesses and crops across the state. Although our current climate research cannot pin down precisely how much warming of the oceans has increased hurricane damage, rainfall of storms like Hurricane Harvey — which dropped the most rain the US has ever seen — has clearly been influenced by the changing climate, and these issues are only expected to get worse.
North Carolina needs to do its part in reducing greenhouse gas emissions. Rather than taxing electric and hybrid vehicles, which are easing the stress of climate change, budget-writers should gather needed revenue by taxing the source of the problems, carbon dioxide. Transportation alone accounted for almost a third of our state’s total CO2 emissions in 2017.
A carbon tax is by no means a silver bullet for climate issues or tax revenue, but at current rates, a tax of less than one cent per metric ton of CO2 would be enough to recoup the $1.1 million in lost gas tax revenues due to EVs. It would also send a much clearer signal that the state is truly interested in protecting its citizens from climate change costs. The next time legislators are looking for money to cover infrastructure spending, maybe they should focus on the ultimate source of rising costs rather than a key part of the solution.
