Electric vehicles. The problem no one wants to deal with.

[bob10]

Fuel excise tax.

The big problem with electric vehicles that no politician wants to deal with

[goingbush]

Fuel excise tax.

The big problem with electric vehicles that no politician wants to deal with

They are not looking at the big picture. More money will be save on health care than is generated by fuel excise due to the zero emissions of EV's

Road tax is not difficult, NewZealand have system that works. There is no excise on Diesel . Vehicles over 3500kg have a GPS device or a hub odometer to calculate road tax, its called RUC , Road User Charge . EV's will use the same system from 2021.

Road user charges exemption for electric vehicles extended | Beehive.govt.nz

[roverrescue]

If you read the article
It is predicted to be a non factor till 2040
And that’s assuming 50% EV from 2030

Listening to the Climate Catastropharians
We will all be worm food by then

But even with our sensible shoes on this is alarmist media at its best
Our pollies won’t make a decision impacting 5 year time lines
20-40 year plans

That’s the purview of China !


S

[4bee]

This thread reminds me of the near clanger they pulled when the GST was introduced with the Wine Tax.

Idea was to drop it down to zero then add the GST of 10%. (well that was the idea for all items but it didn't work out like that, did it?) Problem was that the wine tax was then about 29% so someone woke up to the fact that they'd be out of pocket by aprox 19% so the govt exempted that. Thieves!

They then changed the name, to the Wine Equalisation Tax.

[JDNSW]

The big problem is that fuel excise is a federal tax, but every proposed alternative, as far as I can see, lies outside the powers of the federal government, being the purlieu of the states. And every such tax would be a lot more expensive to collect than is fuel excise, that only has to be collected from a few suppliers. (OK, there are a lot of people who can get exemptions - but these have to do the donkeywork themselves!)

In my view there is very little if any economic justification for a tax on transport - it adds into the cost of virtually everything. The fuel excise is a hangover from when motoring was a luxury, and little road transport of goods was used, introduced because, like alcohol and tobacco, it was easy and efficient to collect.

[clive22]

It is clear current fuel excise formula is at some point not going to work if ev are taken up. Hard to say when since there only spellings a few thousand a year, but momentum is building and this change.

Funds do need to be raised for the building and maintenance of the road network. The excise which is in a coarse and unrefined manner, returned from the federal to the state and local governments directly responsible does this.

If you don’t raise it from excise how do you raise it?

Road user charge, per km, has an element of progression about it in that the more you use it the more you pay for the end goods. The cost of local goods needs to be favoured by lower transport. costs which is reasonable.

Damage( and this is expensive) to road surfaces is such a strong function of axle weight that the damage caused by private cars is disregarded and essentially caused by heavy trucks. So vehicle weight should be a factor in any tax.

Then there is emissions, the health a environmental benefits are broadly accepted, so more cleaner efficient vehicles must be incentivised.

There is going to be a need draw up a road tax system that charges a progressive for km, weight, and rewards lower emissions.

That will be the easy bit some clever people can work out. A political party must convince the electorate. Skin will be lost doing this.

[JDNSW]

....

Funds do need to be raised for the building and maintenance of the road network. The excise which is in a coarse and unrefined manner, returned from the federal to the state and local governments directly responsible does this.

....

As pointed out above - there is no link between road expenditure and fuel excise, so most of your argument is irrelevant. There is little justification for a "user pays" system for road use when, for example, urban rail networks are heavily subsidised. Heavy transport vehicles pay high registration costs bsed on thier damage to roads - but I don't think that even there is there any direct link between this revenue and road funding.

[clive22]

The link is there: more fuel you use the more you pay in excise, the more vehicles that are on the road, the more the government is required to accomodate this increase or risk losing votes.


If this model is disrupted by evs not using fuel, revenue will be raised by other taxes.

If road use is not taxed by usage, and is raised by increasing others taxes consumption, income taxes on capital, etc. It will distort the cost of distribution companies using the roads. Light users will be subsidising heavy users.

Inner city public transport is subsided because it politically expedient to do so. Lots of votes in this.

[JDNSW]

The link is there: more fuel you use the more you pay in excise, the more vehicles that are on the road, the more the government is required to accomodate this increase or risk losing votes.
.......

You misunderstand my point. It is sixty years since road expenditure has depended on the amount of fuel excise collected. And there has never been a direct link between federal road funding on a particular road and fuel excise collected from vehicles using that road. It is quite possible that as much as 50% of all roads have no funding other than from local ratepayers.

Fuel excise certainly has in theory the advantage that it has some proportionality to your amount of road usage, but this is only a very rough proportionality. For example, heavy tranport creates road damage out of all proportion to their fuel usage, as damage is very roughly proportional to the square of the axle loading, where fuel usage is very roughly proportional to vehicle mass. While heavy transport vehicles use more fuel than passenger cars, the damage they do to roads is a lot more in proportion.

And with most excise being raised from passenger vehicles, the amount raised has been dropping as fuel economy has improved. The EV is only the extreme case.

And perhaps worth pointing out that the sales tax imposed on cars was, with the introduction of the GST, reduced substantially - and the Federal government seemed to manage that loss of revenue satisfactorily. So this sort of thing can be managed.

[clive22]

I agree with nearly everything you say. But remember the fuel excise trickles down through various pathways into roads, in a very real but political way. My point it is indirect.
There are federal grants to states each year and do specific projects. Local government only raises around 50% of rates through rates. Without federal grants to each local councils the roads would decline.

To complicate things further state governments let councils manage roads, with financial assistance. Some of this come from state registration fees. Local roads of state importance. Many urban collectors are in this category.

The flow of road money is political and essentially indecipherable, but there is real political capital to made in providing good roads.
Cars are getting more efficient, looking likely to electrify.
A new revenue model will be needed.
I can’t see any level of government reducing road funding,quite the opposite there will be demand to improve them.
The tiers will work out a way to do this, realpolitik style.
There some recognition I believe that users pays is acceptable to the public