State of Virginia Approves $100 Annual Road-Use Tax for All Electrified Vehicles

2 years ago by Eric Loveday 22

Virginia's quarter.  It'll take more than a pocket full of these to pay the $100 annual tax.

Virginia’s quarter. It’ll take more than a pocket full of these to pay the $100 annual tax.

The Virginia General Assembly voted to move forward with some controversial legislation (HB2313), that would abolish the state’s gas tax and replace it with a hike in sales tax.  There’s no direct (Indirect? Yes.  The state’s sales tax will increase) impact to owners of plug-in vehicles in this section of the legislation, but buried deeper in the legal paperwork is some wording that will surely light a fire for owners of plug ins who reside in Virginia.

Taxes...Taxes...and more taxes

Taxes…Taxes…and more taxes

First, we’ll briefly explain the gas tax to sales tax legislation.  In Virginia gas is currently taxed at a rate of $0.175 per gallon.

Beginning July 1, 2013, the gas tax will vanish and a 3.5% sales tax on the “statewide average wholesale price of a gallon of self-serve unleaded regular” gas will appear.

Diesel fuel will be taxed at 6%, which the legislators say is higher due to the destruction done to roads by heaving-hauling diesel rigs.  Those taxes are levied at the “wholesale” level and don’t actually apply to consumers.  But, according to words buried deep in the bill, consumers will foot part of the tax in two ways:

  • Increase Virginia’s sales tax from 5 percent to 5.3 percent.
  • Raise the motor vehicle sales tax from 3 percent to 4.3 percent.

Gas this, diesel that.   Let’s move on to electrified vehicles.

The bill includes an annual road-use fee that now seems to be popping up in several states across the US.  The bill calls for an annual license tax of $100 per vehicle on all highway-capable electrified vehicles registered in Virginia.  This includes hybrids, plug-in hybrids and electric vehicles, as well as natural gas, propane and hydrogen-fueled automobiles.

Why include conventional hybrids?  Well, the legislators must be assuming that since most hybrid burn less fuel, then the sales tax revenue will be low, so a road-use tax will make up the difference.  It’s basically double taxation on hybrid and plug-in hybrids then.  It’s estimated that 91,000 electrified vehicles are on the roads in Virginia, with the vast majority being conventional hybrids.

The Virginia House of Delegates approved the measure by a vote of 60 to 40 and the Senate passed it with a vote of 25 to 15.

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22 responses to "State of Virginia Approves $100 Annual Road-Use Tax for All Electrified Vehicles"

  1. TAP says:

    You EV guys ready to join the Tea Party yet?

    1. kdawg says:

      Depends. If the money goes towards the roads, then it’s mission accomplished. If it goes towards someones pet project or salary increase, then I call “FAIL”.

      I would like to see the math. A before vs. after comparison.

    2. SuperG says:

      This IS a Tea Party proposition. This is a slightly watered down version of the Governor’s proposal. His did not include the wholesale taxes and counted on funny money that may or may not have come from the Federal Government in proposed, but not likely to pass legislation.

      Let’s tax Virginians that buy a lot of stuff instead of having a per gallon use tax.

      This Tea Party here is all about redistributing wealth from all those in Northern VA that voted for Obama.

      1. vdiv says:

        I think we should secede. West Virginia did it, why can’t we?

  2. vdiv says:

    This is ridiculous!

    $100/3.5% = $2,857 of gas. At say 25 MPG and $3.80/G that is 18,797 miles driven per year. So EVs driving less than that will pay more in taxes. I drove about 13,000 miles last year.

    1. taser54 says:

      Think of it as your HOV access fee.

      1. vdiv says:

        Very funny. Except that most people do not use HOV lanes.

      2. HOV Hybrid says:

        I’d gladly pay the extra $100 if they extend the hybrids exemption for HOV but I belive that ends on July 1 2013 and I see no bill to extend it further unless I missed it. If they do not extend this exemption I will simply sell my hybrid and buy the Mercedes I’ve been looking at which has much higher gas consumption and pollutes much more. No way I slum it in the hybrid if I don’t get HOV access lol.

  3. kdawg says:

    I re-read this and am somewhat confused.
    Right now VA has a “Gas Tax” that is 17.5cents/gall or roughly 5%
    This is going away, but a “Sales Tax” (that is just on gas?) will be levied at 3.5%?
    What am I missing here? 5% down to 3.5%?

    Also if the overall state sales tax is going up, and the tax on buying a car is going up, and if you drive an EV and have to pay the $100, you basically screwing the people that don’t drive very much (AKA the people that don’t destroy the roads), which is counter-productive to the cause of fixing the roads.

    Just install tolls and be done w/it.

    1. Eric Loveday says:

      @kdawg

      You’re essentially right.. but the 3.5% sales tax is a wholesale tax that’s basically paid by gas stations to purchase the gas…(oversimplying this intentionally)

      So, gas stations pay 3.5% to get the gas. Or 6% on diesel

      Residents pay increased sales tax on all items purchased across the state and the motor vehicle sales tax increases.

      So, the state is spreading out the tax in two ways to make up for the loss in the 17.5 cent gas tax

      1. Eric Loveday says:

        Text updated slightly for clarification

        1. kdawg says:

          Wow, so its a sales tax on top of a sales tax. 3.5% * 5.3% = 9% tax

          1. SuperG says:

            No, the fuel itself is not subject to the sales tax. Only 3.5%.

  4. Josh says:

    I am guessing the $100 registration fee was to combat the plug-in vehicles drastic lack of gas use, but once they checked the registration numbers they realized there aren’t enough cars to generate any meaningful revenue. The next logical step, add in those Prius drivers…

    At the same time, they are effectively dropping the tax for all the ICE drivers $0.175 / gallon to $.131(3.5% x $3.75/gallon). Then they go on to have everyone make up for the shortage in general sales tax 5.0% to 5.3%.

    1. kdawg says:

      And another 1.3% for buying a car. So a $30K car = another $390.

  5. James says:

    If you want to go all “progressive” there’s no more Democratic
    and “progressive” state than Washington State. We were
    first to legalize pot, then you have to add gay marriage, and
    then we beat Virginia to the EV tax punch too! Yay! :(

    It’s not surprising that the coal state tries to penalize EVs.
    What is surprising is the tax on hybrids too. In WA
    hybrids get a tax. Taxing hybrids here could cause mutiny
    since you cannot toss a rock in Seattle w/o hitting one.

    1. James says:

      Correction: what I meant to say ( no edit ) was:
      In WA, hybrids miss the EV tax.

      ~ sorry

    2. Bloggin says:

      It seems like an odd move to tax hybrids, as they are using gasoline. But what’s worse in VA is that those buying diesel for better mpg, now get taxed 6 cents on the dollar. It’s already over $5 per gallon and .50 more than unleaded. So the new tax that adds .30 cents, which puts them around $5.80 per gallon. .80 cents more than unleaded.

    3. evnow says:

      James, but we do get Sales tax exemption – which more than makes up for that $100 in annual fees. I’d be paying some $30 a month on my lease, otherwise.

    4. Josh says:

      @James

      I would actually think the coal states would really want to push EVs. Stagnant US electrical demand and cheap natural gas is ruining their domestic business. The more power needed, the better chance energy prices rise and make the economics better for domestic coal use.

      This might be the one topic that “King Coal” and “Big Oil” are firmly in opposite corners. [The dramatic names should be said in your best Michael Buffer voice]

  6. Steven says:

    I think there’d be less complaining if they eliminated the gas tax, and levied the $100. tax on all passenger vehicles. But what do I know?

  7. tonyspin says:

    I hope I don’t have to pay the fee to drive my Prius through Va.