Senator Art Rusch (R-17/Vermillion) is another Republican trying to raise taxes. He proposed Senate Bill 85 in another attempt to make electric vehicle owners pay more for their choice to reduce automotive emissions, spend less on driving, and set the stage for independence from fossil fuels. (100% of gasoline comes from fossil fuels; in 2018, only 63.6% of electricity came from fossil fuels, and someday soon, none of it will, because fossil fuels will run out.) SB 85 sought to take $100 of hard-earned cash from the pockets of electric car owners and $50 from hybrid owners each year.
Senator Rusch told Senate Transportation at its hearing last Friday that he did not in any way intend to discourage electric cars or the avoidance of pollution. He said SB 85 was about fairness, making every car owner pay for road maintenance. He noted that electric cars are much lighter than the four-wheel-drive pickups that burn more fuel, make more pollution, and cause much more wear and tear on the roads, so he seems to recognize that gas hogs have a duty to pay more taxes than conservation-minded drivers.
Rusch noted that North Dakota has enacted special fees on electric vehicles. So have several other states, including the green Republic of California, which is charging its ecologically minded e-drivers $100 per car per year.
The Conservation Districts sent Angela Ahlers to tell Senate Transportation that SB 85 isn’t a new tax. She said we should think of it as a replacement tax, making up for the tax electric car drivers would be paying anyway if they still were buying gasoline.
O.K., keep that word game handy: When I rise to give my first State of the State Address and propose a steeply progressive state income tax, I will tell the squirming Legislature that an income tax is not a new tax; it simply replaces the sales tax people would have been paying if we had as many small-farm families and other local residents supporting local economies instead of buying cheaper goods from out-of-state vendors who create less multiplier effect.
Senator Rusch said that electric cars make up just 1% of auto sales. David Owen from the Chamber said that’s a good reason to impose this new/replacement tax: “…there is no better time to put a tax or fee on a group [than] when they are only 1% of the population. They grow to a real political force, this is just going to get tougher. Strike now.”
Again, save that argument for future use: if the fact that a tax affects just a tiny portion of the population is a reason to pass it, then my sixer surtax on the fewer than 3% of South Dakotans making over $100,000 should bring Owen to the table in support.
Senate Transportation chose not to strike now. SB 85 failed, just like the same plan offered by Representative Mary Duvall (R-24/Pierre) in 2018. Swaying the nays was super-lobbyist (and, as Senator Lance Russell keenly pointed out, the Governor’s own lawyer) Matt McCaulley came to committee just like in 2018 to share the persistent concerns of the Alliance of Automobile Manufacturers that taxing a specific technology is unfair. He said the number of fully electric cars in South Dakota still number in the mere hundreds out of over 900,000 cars. He said hybrid cars do pay gas tax and arguably a fair share of gas tax.
Rosa Yaeger, director of the Motor Vehicle Division said SB 85 imposes a new tax. She also said pausing to determine which cars are electric, which are hybrid, and which wouldn’t pay this new tax would slow down the processing of car titles.
Senators Blare, Castleberry, Monroe, Otten, and Russell all voted to kill the new electric car tax again. Senators Soholt and Foster voted for the new tax.
The U.S. Department of Energy says that fueling an electric car in South Dakota costs 43% of the cost of fueling a gasoline car. Drive 10,000 miles, get 30 miles to the gallon, and you’ll spend $790 on gasoline in your regular car. Switch to an all-electric car, and by the USDOE’s calculation, you’ll save just about $450.
California is going to tax electric vehicles, but a new study from economic/environmental research group Next 10 says electric vehicles will boost California’s economy by up to $142 billion over the next decade. Fueling cars with electricity reduces the money flowing to out-of-state and foreign fossil fuel companies and shifts more money to purchases of goods and services that generate local multiplier effects:
Electric cars also mean healthier people:
Lower-income communities also are more likely to suffer health problems as a consequence of air pollution from both vehicles and industrial facilities. Increasing their access to EVs and charging technology can improve air quality, with impacts on both quality of life and health-care costs.
…”The gains for the economy, for households, for disadvantaged communities and for health are so significant that it absolutely makes sense to create policies that are going to get more and more electric vehicles on the road,” said Next 10’s Noel Perry. “I think we need a very significant new push in that direction” [Carl Smith, “Will EV Adoption Become California’s Next Economic Engine?” Governing, 2020.02.12].
Anyone looking to impose a new tax on electric car owners should pause to calculate the social good created by their choices. Perhaps those health benefits and the increased local economic activity make up for the absence of the three bucks they’d throw into the state till at the gas station each week.