As the electrification of North American roads evolves, more EV owners are going to be in for yet another rude financial awakening.
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Lawmakers in the Canadian province of Alberta are set to hit electric car owners with a new CAD$200 (~$147) annual tax to help offset lost revenue from the local gas tax.
In the text of the Alberta government's fiscal 2024-25 budget, the government reasons that the tax is needed because the more electric cars out on the roads of the province, the less amount of money will come out from the gas tax - which they see as 'unfair.'
"While fuel tax revenue is not dedicated to funding construction and maintenance of provincial roads, there are nevertheless fairness concerns with drivers of other vehicles and longer-term challenges associated with declining fuel tax revenue," the Alberta government said.
Additionally, they point out that EVs tend to be heavier than their gas-powered brethren, which has a negative impact on the roads they drive over.
"EVs tend to be heavier than similar internal combustion vehicles and cause more wear and tear on provincial roadways while their owners pay no fuel tax."
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The government anticipates that the added tax on EVs will raise about CAD$1 million in revenue in fiscal year 2024-25, and increase to CAD$5 million in 2025-26 and CAD$8 million in 2026-27. Though it sounds like a lot, it is minuscule compared to the fuel tax, which is expected to raise CAD $1.4 billion in fiscal year 2024-25 alone.
Like the United States, the government of our neighbors to the north have very ambitious plans for EV adoption. Though Congress blocked President Biden's proposal for 2/3rds of new car sales to be fully electric by 2032 in April 2023, the Canadians' Electric Vehicle Availability Standard requires 100% of all cars, light trucks and SUVs to be zero emissions vehicles by 2035.
Brian Kingston, the head of the Canadian Vehicle Manufacturers’ Association, which represents Ford, General Motors and Stellantis, is not a fan of the new tax, as he feels it would be a roadblock for automakers to achieve the zero-emissions goals by the Prime Minister Trudeau premiership.
“Taxing electric vehicles will cost Albertan’s and make Canada’s ambitious EV sales targets even more difficult to achieve,” Kingston said. “Helping Albertans switch to electric depends on efforts from all levels of government to address the key barriers to EV adoption, including affordability and a lack of charging infrastructure.”
More Business of EVs:
- A full list of EVs and hybrids that qualify for federal tax credits
- Here’s why EV experts are flaming Joe Biden’s car policy
- The EV industry is facing an unusual new problem
The proposed tax echoes very similar sentiments behind similar annual EV taxes in 32 U.S. states. In December 2023, a Florida lawmaker proposed charging $200 per year for their EVs, $50 for plug-in hybrids and $25 for electric motorcycles in order to make up for "lost revenue" from drivers who don't have to pay the gas tax.
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