House Republicans propose a $200 annual tax on electric vehicles

House Republicans have unveiled a controversial proposal to impose a $200 annual federal registration tax on electric vehicles (EVs), asserting it will address a fabricated budget shortfall.

Critics argue that the shortfall is primarily due to Congress’ failure to raise the federal gas tax since 1993, which remains at a stagnant 18.4 cents per gallon.

This new tax could dramatically increase costs for EV owners compared to gasoline vehicles, which would face only a $20 registration fee starting in 2031 — effectively a tax decrease, as this fee would replace the current gas tax.

Critics Say New EV Tax Favors Gasoline Vehicles Over Environmental Goals

The proposal, led by Sam Graves (R-MO), who has accepted $163,300 from the oil and gas lobby, raises questions about its motivations. While the registration fee for EVs is positioned as a means of recouping infrastructure costs, it overlooks the significant road damage caused by heavier vehicles, particularly large trucks.

Instead of assessing road usage accurately, the proposal disproportionately penalizes EV owners, effectively disincentivizing their adoption.

Furthermore, this tax hike could exacerbate existing issues with road funding. With nearly 290 million gasoline vehicles on the road, a mere penny increase in the gas tax could yield substantially more revenue than the EV tax is projected to generate.

Environmental advocates argue that this approach paradoxically encourages gasoline vehicle usage by providing financial relief to those drivers while placing an excessive burden on EV owners.

Interestingly, prominent EV entrepreneur Elon Musk has supported the Republican party that is aiming to levy higher taxes on EVs. This divergence from Tesla’s environmental mission raises eyebrows among industry observers.

As the debate over EV taxation continues, alternative solutions, such as a fair mileage tax for all vehicles, gain traction as potential paths toward equitable infrastructure funding.