California tries diligently to be an environmental leader. From spending billions of dollars building a high-speed rail system to nowhere to forking over tens of millions each year on urban forestry—code for planting trees in cities—the state has not shied away from spending big on green goals.
So you would think California would applaud the state’s 200,000 residents who drive zero emission vehicles (ZEV). And yet, while California may applaud these civic-minded motorists, their reward is … higher taxes.
Drivers in California already pay some of the highest gas taxes in the country for some of the worst roads. Indeed, when the various levies and fees are added up, motorists in the Golden State pay nearly a dollar in taxes for every gallon of gas they buy. But according to Gov. Jerry Brown, this still isn’t enough to keep the roads near their current ranking of forty-fourth in the nation.
Now, those who drive ZEVs don’t use gas, and so don’t pay gas taxes. The governor’s office has decided to do something about that: The idea is to tax people who drive zero emission vehicles to fix the roads—after giving them a tax funded rebate to buy the car in the first place.
This is not exactly Economics 101.
Rather, this is fiscal liberalism run amok. With California’s roads and bridges continuing to decay, the state just enacted a new law charging an annual fee to owners of ZEVs—”after all,” they say, “they use roads and bridges too!” But isn’t the purpose of a zero emission vehicle to reduce greenhouse gas emissions? And wasn’t the state’s cap and trade imposed by its Air Resources Board designated to do just that: reduce greenhouse gases?
The problem is that most of the cap-and-trade tax—the roughly 11 cents per gallon imposed on gasoline producers in the state, which is passed on to consumers in the base price of gasoline—does virtually nothing to reduce greenhouse gas emissions, or even build, maintain, or repair roads. Rather, since its inception, this “environmental tax” has spent about a quarter of its collections on affordable housing, roughly another quarter on building a high-speed rail system, and another quarter on various other non-highway projects like the urban forestry program and a black carbon wood smoke program. In fact, more than 300 of the 400-plus projects funded by this environmental gas tax are admitted by the state to have absolutely no effect on greenhouse gases or highway infrastructure. So now it’s time to tax the environmentally conscious to fix the roads.
But wait, there’s more. In addition to charging ZEVs to use the state’s roads, the new law also raises the current 39-cent-per-gallon retail tax on gasoline by another 12 cents. On average, drivers of gasoline-powered vehicles in California now will pay about a nickel in taxes for every single mile they drive. Couple this with the fact there are about 35 million registered gasoline vehicles in California—each driving about 1,000 miles per month—and you really wonder how an extra few hundred bucks per ZEV per year can make any difference.
Yes, there is the question of fairness—ZEVs use roads so shouldn’t they also contribute to construction and upkeep? But by that logic bicyclists and pedestrians should pay road taxes and registration fees, too. After all, significant expense is incurred building and maintaining special sidewalks and bicycle lanes, as well as erecting signage, and policing bicycle accidents. Fair is fair, right?
Kevin Cochrane teaches economics and business at Colorado Mesa University, and is also a Permanent Visiting Professor of Economics at The University of International Relations in Beijing.
