Here in Alabama the Republican legislature has recently passed and our Republican Governor has signed a bill imposing a new state tax. That in itself is big news since Republicans in this state hate raising taxes with a passion. However, Republican leaders in Montgomery have finally come to the realization that our road and bridge infrastructure is crumbling about us and something had to be done. Hence the new tax will raise money to be used by the state Department of Transportation to finance projects that will repair or replace the 1,200 bridges in this state that are considered structurally deficient and to better maintain and improve our highway system.
However, in typical Alabama fashion the method devised by the legislature to collect those taxes – the state tax on gasoline has been raised by 10 cents a gallon – is a regressive tax. That is, the poor will spend a greater share of their income on the new gas tax than the middle class and the middle class will shell out a greater share of their income than the rich.
The Alabama state and local tax system which relies heavily on sales taxes and fees is already a heavily regressive system of taxation. In this state unlike many others, even food is subject to sales taxes. Poor people, and many of those in the middle class live paycheck to paychecks, spending most of their incomes on necessities and other items which are subject to sales taxes while the upper middle class and the rich do not. As a result wealthiest 1% of Alabamians pay only 3.8% of their income in state and local taxes while those taxes eat up 10% of the incomes for the bottom 40%. Alabama already had the 10th most regressive tax system in the country and the new gas tax will only make that situation worse.
In this state I shouldn’t find this surprising. The grip of special interests on state politics is strong and has long favored the welfare of the richest citizens and most powerful businesses and groups over that of the rest of the state’s citizens. I guess that given the expressed bias of the Republican politicians who control state government toward the fossil fuel industry and their unrelenting denial of global warming, another aspect of the gas tax bill should be unsurprising as well.
The new tax legislation also requires that owners of totally electrical vehicles pay a flat tax of $200 a year, and that the owners of plug-in hybrids will have to pay a $100 a year flat tax. On the surface that sounds fair. I am the proud owner of a totally electric Tesla Model 3 (which I love) and I use the roads and bridges of Alabama just like the owners of gas powered vehicles, so I should pay my fair share, right? Except my share will be far from fair.
Let’s do some simple math. According to Federal Highway Administration, the average car is driven 13,476 miles per year and average internal combustion engine (ICE) personal vehicle gets 24.7 miles per gallon in gas mileage. Dividing the 13,476 miles per year by this gas mileage figure leads us to conclude that the driver of the average ICE vehicle buys 545.6 gallons of fuel per year to keep his car on the road. At 10 cents a gallon, that means the owner of an ICE vehicle in Alabama will pay an average of $54.59 in extra gas taxes while I pay $200. In fact, with that same $200 I could pay the taxes on enough gas to drive 49,400 miles if I had an ICE vehicle. I assume that since plug-in hybrid owners will have to pay a $100 flat tax and still have to pay gas taxes on the fuel they use, they will be in similar situation.
With global warming now being better understood as a looming threat to the well being and security of everyone on this planet, many countries and a number of our states are providing incentives to encourage consumers to buy electric vehicles. As of now the US government offers an initial $7,500 federal tax credit to make electric vehicles more price competitive with ICE vehicles and encourage car manufactures to get in the business of producing electric vehicles. Leave to the backwards government of the State of Alabama which has offered incentives for mining coal to penalize those who buy electric vehicles. By the way,Trump has set a good example for the Republicans running things in Montgomery; he says that he wants to eliminate the federal tax credit for electric vehicles entirely. Heavens save us from idiots.
Cajun 3/18/2019
You bring out an interesting point, but even if you include the original $0.18 a gallon Alabama tax on gasoline which the new legislation increased to $0.28 per gallon, it is still a rip off for owners of EV’s on as state level and that is all that the state legislature controls. (My answer to you on Facebook which you have copied and pasted in your first comment above explains why.) Keep in mind that I also pay state tax on the electricity I use to charge the car.
It doesn’t matter what the tax is on the federal level because the federal government does not attempt to charge a flat tax to make up for the fact that I don’t pay federal gas tax when driving my Model 3. In fact it instead provided me with a $7,500 tax credit when I bought my EV. So while the federal government offers incentives for buying an EV, the State of Alabama offers a only a disincentive.
I am not saying that it isn’t much cheaper to drive my EV even though I am paying more than the typical ICE car driver to maintain the highway infrastructure in Alabama. It only cost me $6,25 of electricity to charge my Model 3 to drive 320 miles. My wife’s hybrid Ford Escape requires $40 to $45 to drive the same distance – probably more now that gas prices are rising again.
So even paying the $200 a year flat tax on EV’s I am coming out far ahead operating My Model 3. The point of my article I wrote above is not about money. It is about the government of Alabama’s public denial of the threat of global warming and its public posture to punish those who personally try to do something about it.
The math is wrong. Although the author says the difference is between 56 and 200 due to .10cents per gallon the fact is he’s been avoiding paying the rest of state and federal gas tax already in existence.
Glen Ross Herbert Thanks, your point is a good one, but EV owners in Alabama are still getting screwed. Looking at it from your perspective, the gas tax in Alabama before it was raised was $.18 a gallon and with the $0.10 raise is now $0.28 a gallon. Let’s do the math again With your point in mind. The average car is driven 13,476 miles per year and average internal combustion engine (ICE) personal vehicle gets 24.7 miles per gallon in gas mileage. Dividing the 13,476 miles per year by this gas mileage figure leads us to conclude that the driver of the average ICE vehicle buys 545.6 gallons of fuel per year to keep his car on the road. At 28 cents a gallon, that means the owner of an ICE vehicle in Alabama will pay an average of $152.77 in extra gas taxes while I pay $200. And that doesn’t take into consideration the fact that the owner of an ICE vehicle may drive his/her out of state, on business or on vacation, where he’s not paying any Alabama taxes, making the discrepancy even larger because I’m going to pay that $200 even if my car sits in my garage the entire year. Then compare this penelty that I pay in Alabama to other states where which give you a tax credit for buying a electric vehicle.
Rick Guilbeau what about federal gas taxes? Do you know what that is?
Rick Guilbeau I just looked it up and it’s 18.4 cents per gallon.
That comes out to 44.4 cents per gallon which equals $242.246 I believe.
So not a rip off
Also this is for taxes that pay for road usage not the vehicle purchase which has federal tax credits that trump is talking of killing.