Alberta’s new Finance Minister Nate Horner says the province might be open to the idea of a road tax or some other levy for EV drivers as a means of recouping lost fuel tax revenue..Speaking in Calgary Monday to announce a six-month extension to the fuel tax holiday, Horner said there is a “general expectation” that fuel taxes are used to fund road maintenance programs, something EV drivers still won’t pay after the fuel tax is reintroduced after Dec. 31 of this year..“I’ve heard it brought up and discussed in policy rooms and municipalities and the like, but it’s never been brought to me in this role or discussed at the cabinet table,” he said. .As expected, provincial officials, including Premier Danielle Smith, made good on an election promise to extend the 13-cent a litre fuel tax holiday until the end of the year. .Horner said the economic impact — ie lost revenue — to the provincial treasury won’t be known until the government releases its fiscal first quarter report in August. According to the last provincial budget, the province had forgone about $850 million in revenues through nine months it was in effect in 2022, from April to December..All told, extending it a full year is likely to cost the government upwards of $1.25 billion assuming oil prices stay below the $80 per barrel threshold. And even then, both Horner and Smith stressed that it would be gradually re-introduced as economic conditions warrant..The issue of taxing EVs, however, is something that is gaining traction in both Canada and the US. Presently 18 states — including ones like California that offer generous rebates for consumers to purchase EVs — have some kind of annual registration fee ranging from $50 in Colorado to $200 in Georgia..Even in Canada, governments have started looking at ways of making up lost fuel tax revenue. In October, 2021 Saskatchewan became the first Canadian province to introduce a $150 annual fee to register an EV..The issue is expected to become more acute after the federal government — which collects more than $6 billion in fuel excise taxes annually, not including the carbon tax — mandates all vehicles be zero-emission by 2035. Federal taxes amount to a flat 10 cents per litre on gasoline and four cents on diesel..In Alberta, gas taxes go into general revenue, whereas in the US they go exclusively to road maintenance. Charging a flat fee means that EV drivers who mostly run errands around town are subsidizing those who travel long distances..Oregon became the first US state to introduce a road usage charge based on 1.8 cents per mile — about 1.4 cents per kilometre — no matter where they drive, based on odometer readings. Presently the program is voluntary; drivers of either gas or electric vehicles who adopt the system are exempt from paying either the state gasoline tax or the extra registration fee..Based on an average of 20,000 kilometres per year, that would mean an EV driver would pay about $360 per year, on par with a 14 cent per litre fuel tax, assuming an average of 50 litres a week for an average driver. In British Columbia, which pays about 20 cents in fuel taxes, that figure is closer to $520. .When the tax holiday was originally extended in October of last year, former finance minister Travis Toews estimated drivers saved between $160 and $440 over the previous six months to the end of 2022. On Monday Smith said drivers could expect to save upwards of $6-$18 every time they fill their tanks..In a 2022 op-ed for the CBC, Larry Hughes, a founding fellow of the MacEachen Institute for Public Policy at Dalhousie University in Halifax, argued EV owners are getting a “free ride.”.“If electric vehicles become a sizeable portion of the vehicle fleet and these vehicles do not pay for their use of the roads, revenues for the upkeep of our roads will decline, and provinces will find it increasingly difficult to pay for road maintenance,” he wrote. .“This is essentially a subsidy to drivers of electric vehicles.”
