Fuel tax reform

Editorial by Greenville Daily Reflector, January 7, 2015.

As fuel prices are decreasing at a record rate, North Carolina’s gas tax actually climbed a penny on Jan. 1. Unfortunately, the new revenue will not call off the search among state legislators for ideas to mitigate a looming highway budget shortfall.

Whenever the legislature is searching for revenue ideas, taxpayers should hold on to their wallets. In the case of fuel taxes, that includes those who own or are thinking of owning electric or hybrid vehicles.

North Carolina owners of electric vehicles last year began paying an additional $100 yearly tax. Some questioned the logic behind implementing such a fee, which a year ago only applied to about 1,600 North Carolina motorists — the approximate number of electric cars on the road at that time.

Once a tax is implemented, however, it can only be increased — and likely expanded to include hybrid cars, which use both fuel and electricity.

Some drivers of electric cars don’t mind paying an additional tax to offset the amount of gas tax they are not contributing to road maintenance. Many, however, view the added fee as counterproductive in the effort to move consumers away from gas-guzzling vehicles and toward more environmentally friendly vehicles.

With the dramatic drop in fuel prices further affecting both the tax structure and the debate over fuel efficiency, taxpayers should watch for legislators to begin a debate over how to create new revenue for roads.

An October article, “State efforts promote hybrid and electric vehicles,” published by the National Conference of State Legislatures, offers a glimpse of what that debate might look like. While the article points out that many states are considering a variety of incentives to promote hybrid and plug-in electric vehicle adoption, it also touches on the negative effects of more fuel-efficient vehicles.

“Colorado, Nebraska, North Carolina, Virginia and Washington have adopted fees for electric vehicles, and several more states have considered legislation in 2014,” the article states. “Additionally, Oregon has agreed to a 5,000-vehcle opt-in program beginning in 2015 that allows drivers to pay a fee based on miles driven rather than gallons of fuel purchased.”

You can bet that lawmakers in North Carolina and elsewhere will be watching Oregon’s experiment closely this year. Considering the effects of both volatile oil markets and increased fuel efficiency, separating the road-usage tax structure from fuel consumption might be the most equitable route.

http://www.reflector.com/opinion/editorials/editorial-fuel-tax-reform-2765507