Proposed Hybrid Registration Fee Should be Re-examined

By Nicholas Garafola


Image Courtesy of the NREL.

Are consumers who conserve fuel responsible for fuel tax revenue shortages?  According to the budget proposed by the North Carolina state senate, the answer is yes.  The budget proposes a registration fee for hybrid and electric vehicles.

Such vehicles have become popular with consumers, who purchase them in response to increasing fuel prices and out of concern for the environment. The North Carolina State Senate’s proposed registration fee ($50 for hybrid and $100 for electric vehicles) may not be out of reach for many vehicle owners, but it punishes consumer decisions that reduce carbon footprint and ensure cleaner air for their communities.

North Carolina depends on revenue from fuel taxes to fund transportation construction and maintenance.  As the overall fuel efficiency of American’s fleet has increased and Americans have altered their driving habits, fuel tax revenues have declined.  The challenge for North Carolina is collecting enough revenue to maintain roads.  Lawmakers can argue that drivers of fuel efficient vehicles need to pay their fair share to cover the costs of roadway use.

Aside from the fact that the proposed fee does not account for the frequency of road use or differences between lightweight and heavy vehicles, the proposed fee structure fails to account for differences in fuel consumption among hybrid models.

Given the recent advances in fuel efficiency, lawmakers need to examine the dependence on fuel tax revenues for roadway maintenance.  The revenue shortfall indicates that the fuel tax does not adequately account for the costs of roadway use.

The proposal comes as many other efforts in the general assembly aim to reduce regulation or additional taxes.  If drivers of hybrid and electric vehicles are “getting away” with paying modest amounts of fuel tax, the tax burden falls proportionately on drivers of vehicles that consume more fuel, along with the cost of fuel.  

A way forward entails examining the bigger picture.  When considering sources of revenue, lawmakers should be mindful of the consumer interest in efficient transportation.  Given the impacts of vehicle fuel consumption, pollution and the increased wear associated with large vehicles on roadways, a logical proposal would not target lightweight and efficient vehicles.

North Carolinians are choosing fuel efficient vehicles because they want to save money and protect the health of their communities.  The current fuel tax structure may not be adequate, but charging the owners of hybrid and electric vehicles a roadway fee is counterproductive to reducing consumption of and pollution from fossil fuels.  Moving forward, North Carolina needs to address revenues while continuing to promote fuel efficiency.  

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