Pa. House committee to consider bill setting electric vehicle fee to start at $125

Pennsylvania’s electric vehicle owners would pay an annual fee to help make up for lost gas tax revenue that goes toward maintaining the state’s roads and bridges under a bill to receive consideration by a legislative committee Monday.

The legislation, sponsored by the House Transportation Committee Chairman Ed Neilson, D-Philadelphia, would establish the annual fee starting at $125 next year and increasing by $25 a year through 2029 when it reaches $225. In 2030 and thereafter, the annual fee would be adjusted annually at the rate of inflation.

It also would repeal the alternative fuels tax on electricity for residential charging that battery-powered vehicle owners are supposed to pay but few do. The number of Pennsylvania electric vehicles according to PennDOT numbered 63,247 as of Jan. 31

Neilson’s bill is the second electric vehicle fee proposal the House committee has considered during the 2023-24 legislative session.

In December, it voted 22-3 to send a Senate-passed bill that would have set the annual fee at $290. That would be among the highest of any state that has an electric vehicle fee. Neilson voted in favor of that bill despite considering the $290 rate to be unreasonable. He said it was his intention to offer an amendment to lower the fee if the bill reached the House floor.

“Many felt that if we gradually increase the fee individuals will be more open to pay,” he said. “We brought multiple groups and stakeholders together for months on end, while not all agreed with my version, it was negotiated. To say my way or no way is not acceptable in any format.”

Some members have voiced opposition to imposing a fee out of concern it could deter people from buying the cars that are costlier than gas-powered ones even with the government-provided tax credit.

Others argued that it is a matter of fairness given the wear and tear electric vehicles put on roads while avoiding the gas tax that fuels the state’s Motor License Fund and helps pay for road and bridge maintenance and highway traffic safety.

“We can’t continue to subsidize electric cars at the expense of our highways, which is what we’re doing every day that goes by with the alternative fuels tax that nobody is paying,” said Sen. Greg Rothman, R-Cumberland/Perry counties, who sponsored the Senate bill. “I talked to a lot of electric vehicle drivers and they say they want to pay their fair share.”

He settled on the $290 a year fee based on what PennDOT estimated the average state driver of a gasoline-powered vehicle pays. While that would be the nation’s highest electric vehicle fee, he said to keep in mind the state’s 57.6 cent a gallon gas tax which is the nation’s second highest behind California.

At a Senate budget hearing, PennDOT Secretary Mike Carroll said he was happy to engage with lawmakers to arrive at an acceptable fee.

“The balancing act, of course, is making sure that we have inclusion of electric vehicles and hybrid electric folks into the motor license fund without inhibiting the ability for Pennsylvanians to take advantage of electric vehicles going forward,” Carroll said.

Thirty-two states have an electric vehicle fee in place, ranging from Hawaii and South Dakota’s $50 to Georgia’s $213.70, according to the Washington, D.C.-based Tax Foundation. Several other states, like Pennsylvania, have proposals to join the majority of states in establishing a fee.

By rolling out the fee gradually, Neilson said it has gained the support of environmentalists, car manufacturers and others, including some electric vehicle owners who he said would be given a chance to adjust to this new fee.

Besides, even at the Senate’s proposed higher rate, Neilson said it will only generate about $18 million a year based on the state’s latest number of registered electric vehicles, which is “a small dent” in the $9.35 billion transportation funding gap.