Virginia Repeals Hybrid Car Tax

Dave Zatz —  March 5, 2014


I’m not much of a letter writer (these days), but something about our former governor’s hybrid and electric vehicle tax rubbed me the wrong way. He argued that tax revenues were or would be down due to a reduction in gasoline purchases and these lost funds are necessary for ongoing road maintenance and whatnot. While that seems logical on the surface, the remedy struck me as punitive. And, if the state were concerned with equity, they’d tax owners by miles driven against vehicle weight – which probably provides a more direct correlation to road wear and tear. “Hybrid” also strikes me as an artificial, inelegant line in the sand… given my coworker who drives a hybrid Chevy Tahoe that is less fuel-efficient than say a gas-only Toyota Camry. Also, in something of a policy contradiction, early hybrid vehicles were granted HOV lane exemptions… which were indefinitely extended in 2012 by the very same administration.

The annual tax was originally proposed at an even $100 but, due to some sort of miscalculation, was later passed at $64 and went into effect last July. Amidst some noise, from folks such as myself, an effort to repeal the tax started working its way through the Virginia legislature earlier this year, approved at every step, and finally signed by the current governor last week. Obviously, I support the decision… although the refund of fees paid seems like an unnecessary paper drill and expense for the state – I would have preferred they keep my $64.

Regardless of where you stand on this topic, and it is a multifaceted issue, the overarching theme is that new, disruptive technologies are fundamentally impacting just about all aspects of governance. And it’s gonna take a while, along with a variety of experimentation, to get this complexity sorted.

20 responses to Virginia Repeals Hybrid Car Tax

  1. If you choose to comment on this post, as with every comment thread, I expect mature discourse – we discuss the issues like adults, no personal attacks, etc. Anything out of bounds will be removed. Thanks for your cooperation.

  2. Thanks for the heads up on this. I agree with your points, especially regarding a more fuel efficient car vs. less efficient hybrid.

  3. Even pure EVs cause some wear & tear on the road infrastructure – was $64 annually really too much to pay?

  4. I had no problem with the number and no problem contributing my fair share (having wished Amazon would collect sales tax long before they actually did) – for me the issue was a perceived inequity in how the additional revenue was identified. I agree with your point that the dynamics are different and more dramatic with full-on EVs like the Leaf and Tesla which never use gas and how should they contribute? In Virginia, we pay personal property tax on cars on an annual basis – I wonder if that could be adjusted in some way to meet whatever deficiencies in revenue have been identified. We also have annual or biannual inspections – that could be used for validate and calculate mileage against weight if they wanted to be truly equitable… but that might be complex, especially when factoring in car sales/purchases.

  5. I’m a volt owner and I support an VMT tax. EVs are the future so we might as well figure out how were going to pay for road improvements and repairs when we aren’t filling up at the pumps as much or at all.

  6. Of course, adding to the complexity, not all miles may be driven in a given state… folks in my region are regularly moving between Maryland, DC, and Virginia. And if you implement it on a national level, how do you pass those funds back in the right way. I don’t think anyone wants GPS tracking – creepy and invasive at one end, impractical to implement on the other.

  7. Here in NY State, the owners of EVs and Hybrids are eligible to use a special green (color) EZ-Pass tag that allows them to receive a 5% discount on tolls. I see this as similar to the HOV lane exemptions that Dave mentions above, except that it’s main benefit is a (small) financial incentive that seems to contradict the stated purpose of tolls.

    As an aside, I have never seen a green EZ-Pass tag in a vehicle (except for my Prius) so it seems that their availability is not well known. Perhaps that is intentional?

  8. Taxes are to pay for things… but they also serve a purpose to encourage and discourage all kinds of things. Donations to charity give you tax deductions, because we as a society want to encourage it. While the gasoline tax is to pay for roads, it also becomes a tool to encourage less driving and/or more fuel efficiency.

    I think the problem with hybrids, but especially EVs is that they kind of confuse the issue. On one hand, they aren’t paying for the thing (the roads), but on the other hand it’s used as an encouragement to get people to buy EVs. While some type of electric car future would legitimately cause us to have to adjust how we pay for roads, that tax always struck me as more of a way to discourage electric/hybrid cars… and not a way to figure out how to pay for the roads in the future.

    I’m glad they repealed it… but yeah, longer term, they’ll have to figure out something a bit more consistent.

  9. For a VMT tax, I’d just stick with whatever state the car is registered in (and where the person lives or has a place of residence) gets all the money. For 18-wheelers or other large transport vehicles, give the money to the US DOT to spread out all over the country based on which areas do the most driving.

    This might hurt or help some states w.r.t. commuters. I don’t think its that big of a deal because a) I don’t deal with it and b) when I do have to put gas in my Volt, I put it in at a gas station near my house, usually on a Sunday night.

  10. So you can’t pay a .18 (rounded per day for the year)@ day? That’s also avoiding sales tax on engine servicing, parts, and emissions testing.

  11. Dave, you probably got a direct subsidy when you purchased your car. You certainly got an indirect one. Your car uses the roads just like mine. Why do you think you should be exempt from funding their repairs?

  12. I absolutely have no problem paying my fair share and, as Mark points out, the number was insignificant (I pay nearly that much on a weekly basis to an Australian toll road, perhaps another poor Virginia government decision). But I believe this somewhat arbitrary flat fee was an inelegantly applied band-aid whereas we need something more sensible and scalable long term as hybrids and EVs (and my mom’s gas-only Yaris) continue to chip away at gas tax revenue. By the by, I did not receive an upfront subsidy as far as I know and I honestly don’t intend to keep this car much longer, so I’d say my thoughts are more about the topic and technology changing the landscape (in various realms), and less about my fleeting vehicle. I hope the powers that be are researching something more thoughtful and comprehensive rather than just kicking this down the road.

  13. To the non-Northern VA commenters: there’s several other factors at play that Dave didn’t include in order to get to the salient point. The first is that the same administration that wanted the $100 punitive tax on fuel-efficient vehicles also wanted to zero the gas tax and replace the lost revenue through higher sales tax – essentially subsidizing Big Oil by penalizing everyone else. The second is that there’s a new commuter line being built, for which the state has to pony up, and the previous administration refused to do so without fighting tooth-and-nail, even though there’s a clause in the legally binding interstate compact dating back to the mid-1960s requiring the construction of said line … in the 80s. This was the “screw you” to the hybrid/EV-driving urbanists who have fought the state to get said line not just funded but also built. The real tragedy is of course that the line is going to be run by a financially unsustainable transit authority.

    And yes, those of us who have to commute in by road also see the injustice in allowing non-HOV hybrid/EV vehicles to eat up all of the extremely limited roadway into DC. They’ve started fixing it, but sadly, almost all the existing stock has been grandfathered in, which means we’ll be stuck with the awful commute for years to come until the stock diminishes, and the loopholes allowing transfers of plates from hybrid/EVs to newer models are closed.

  14. Also note that (I assume) higher gas mileage but non-hybrid cars are not required to pay the tax, so the arguments that “you’re not funding road repairs” is being selectively enforced.

  15. The missing element is deaths due to poor air quality due to vehicle exhaust, which exceeds 1000 people per year in Virginia alone. It makes sense to subsidize electric cars because the road construction cost is small part of the much bigger equation which includes treasure and blood for oil wars, lung cancer deaths and developmental issues with children caused by pollution.

  16. George Lester June 15, 2014 at 4:53 pm

    I bought my Honda Insight hybrid (2000 manual, 61 mpg city, 70 hwy, eat your heart out!) 15 yrs ago and got substantial fed and state tax credits,which w ere in place to encourage us to reduce our dependence on foreign oil,especially from areas that might require us to fight wars to ensure the supply. I’ve saved about 35 per cent of my fuel costs for 15 yrs, and got back the initial extra ‘hybrid’ price differential several times over. But it burns my soul to pay a penalty of $64/ yr for trying to be a responsible, socially conscious citizen, because a already discredited governor and repub legislature in the pockets of the oil lobby came after me and my ilk to be able to reduce the gasoline tax. It has been repealed, but I had to pay it on May 31 anyway. Idiocy? No, big oil lobby and greedy pols!

  17. Last night I was trying to renew my late registration on my hybrid. I understand that I still have to pay the $64 for the current year due to my March renewal date. But when I put in for a three-year renewal the system tried to charge me $64 for years 2 and 3 as well. So I went to the DMV today, and the clerk said I do have to pay $64 every year from now on because of when I bought my vehicle! I had her get her manager, who came to the counter carrying the printed out law. She also stated that I have to pay the fee from now on. I of course argued with her saying it goes by year, and she said absolutely not, and that it goes by month. We ended up in this loud back and forth debate. She is underthe impression that everyone who bought a hybrid before July 1st 2014 has to continue with the $64 indefinately! It seems to me they just haven’t updated the website to deal with year 2 and 3. Help!

  18. Scott,

    It sounds like the personnel at the DMV location you went to are very ill-informed. I would try another location or renew online. I renewed my registration online and did not have to pay the additional $64 per year.

    I am in favor of a adjusting tax based upon annual mileage and vehicle weight.It’s going to be a complicated solution with so many inter-state commuters and military personnel with vehicles registered out-of-state.

  19. Taxes can be used to reward behavior with positive externalities and compensate society for behavior with negative externalities. This was the justification VA used to tax hybrid vehicles—except the negative externality here was of its own creation, because of the manner by which they decided to collect tax revenue for road repair and maintenance, and of course selectively ignoring any positive externalities of driving a more fuel efficient vehicle—they’re are many, some of which have already been noted above (typically lighter cars on average resulting in less wear to roads, improved air quality, less total demand for fuel driving prices down). Those who would sarcastically ask “Was $64 too much for you?” are basically being offensively dense, because to thinking people such a tax is a perfect exercise in anti-morality. Why not give rebates to people who buy Hummers, since they’re apparently less of a drain on the system? And why not just impose a small tax on picking up litter and holding open doors for people while we’re narrowmindedly disincentivizing pro-social behavior?

  20. Casey–How long ago did you do it? When my wife went online two days before me it was adding $64 per year for years two and three, and then for me a few days later. That’s why I went over to the DMV because I thought they would be able to override it.So after the big blowup at the DMV, I went home and registered online but just for one year. When it gets fixed I’ll register for the other few years. I did mine on July 8th and it still wasn’t working on the DMV site.

    Peter–I totally agree. It was one of the most ill-conceived laws in recent memory. And while $64 on a yearly basis isn’t devastating financially, it does add up. For three year renewal they wanted $313 from me. However, even if it was only $10 I would be upset because it is so asinine.