Nobody likes taxes, but they would not be so bad if other people would pay their “fair share” so that I could pay less. You hear this all the time, often in the context that “the rich” should always pay more income taxes. What brings this to mind right now, however, is a Star Ledger guest column entitled “EVs tear up N.J. roads. They should pay their fair share to fix them” by Matthew Hale (published on-line on March 1, 2024, and in print on March 3, 2024). Professor Hale wants to buy a pickup truck, just because, but is ticked that he would have to pay more than his fair share into the Transportation Trust Fund in the form of gasoline taxes.
Several years ago, Governor Christie approved an increase in the gasoline tax to fund transit improvements. The tax amount is adjusted annually to produce a fixed amount of revenue. Most recently the tax was increased by 0.9 cents per gallon to 42.3 cents per gallon, making New Jersey the seventh highest. NJ’s gas tax to rise in October | NJ Spotlight News.
All-electric vehicles of course do not use gas, so their drivers do not pay a gas tax. Hale thinks this is unfair, especially because EVs tend to be heavier than other cars, and he has just the solution: there is a proposal to cut the gas tax by 33%, and Hale suggests that the $150 million that would be lost to the TTF be made up by increasing the annual registration fee for the 123,000 EVs registered in New Jersey by $1,220 a year. If you think that’s fair, ponder these points:
- Even if heavier vehicles cause more damage to roads in something close to a direct relationship to the weight difference (and this presumes that the TTF merely repairs existing roads and bridges), surely another factor, likely of more significance, is the distance travelled.
- The 33% cut is just an arbitrary number, at least with regard to Hale’s fairness point. The drivers of the 123,000 EVs (Hale’s figure; I believe this also includes plug-in hybrids) would be paying one-third of the annual TTF levy while the drivers of the other 2,412,248 vehicles registered in New Jersey would pay two-thirds.1 This means that the EV owner is paying, in extra registration fees, just under ten times the amount that the average gasoline-powered car is paying in New Jersey gasoline tax.2 Or put it this way, the $1,220 additional registration fee equates to the tax paid on 2,884 gallons of gasoline (or about 4,305 gallons if the gas tax is actually reduced by 33%).
And none of this considers the environmental benefit from the elimination of tail pipe emissions.3 Governments use tax policy to incentivize certain behaviors all the time.
As a final question about fairness, is it fair that I, who has never been a consumer of the New Jersey public education system, either as a student or parent, should have to pay thousands of dollars a year in school taxes?
Jay Bohn
March 4, 2024
- Actually less, because some portion would be paid by out-of-state drivers who purchase gas in New Jersey. ↩︎
- I’m mixing statistical sources, so these numbers are not as exact as they seem. The 123,0000 number comes from Hale’s editorial. According to U.S.: total number of cars by state | Statista, based on 2021 numbers, New Jersey had 2,535,248 registered vehicles. I merely subtracted the one from the other. ↩︎
- I do realize that the production of electricity to charge EVs does itself have environmental impact, but individual internal combustion engines do pollute more than any public utility. ↩︎