Is the New Illinois EV Fee Fair?

I had originally planned to write a post about the newly proposed Illinois EV registration fee of $1,000 per year and how damn ridiculous it was but luckily I procrastinated long enough that it isn’t even a thing anymore. There was a lot to complain about too: the flat fee of the EV tax vs. usage based gas tax, the ridiculous amount EVs would be charged over gas cars, the killing of demand for EVs, etc. I also gave some speculation as to how people would react to the huge increase. Economics has taught me that when you do one thing like tax the fuck out of a portion of the population they find ways to get around it, legally or illegally. I’d imagine a huge chunk of EV owners would simply sell their car and find some beat-up 35 mpg junker to weather the storm until wiser minds prevailed in the legislature.

Luckily that bill seemed to be some bait-and-switch tactic to scare us EV owners into being happy about a tax increase: we now need to pay (about) $250 per year to register our cars. Compared to the initially proposed $1,000 this is a damn deal! But compared to the current price of like $20 we’re totally getting screwed. Instead of being angry about having our fees raised we can be excited that we didn’t get stuck with that $1,000 fee!

This yearly charge is also offset by the fact that gas vehicles also had their registration charges raised to $150; in effect the EV owners are paying a yearly $100 tax on their vehicle. This was part of the reasoning behind the new law as well: us EV owners don’t pay a damn dime towards a gas tax which means we don’t pay a damn dime towards road repairs. We basically get to drive on the roads for free.

The main outrage over the $1,000 was that it was much too high and that simple math showed that an average gas car would only pay between $100-200 in gas tax in a year. With that amount the EVs were totally being screwed. I don’t mind paying for my fair share of road usage but $1,000 is nowhere near my fair share. It’s like 10 times my fair share.

So now that we have these new laws how do the numbers work out? Are the new laws fair to us EV owners? Are we now paying our “fair share” or are these laws meant to punish the EV owners?

Firstly, there are a few things we need to look at here. Here’s a good and proper article covering the new laws and their numbers. EV registration in Illinois now will cost $250 whereas gas vehicles will only cost $150. Once again this is easily seen as a yearly $100 tax on the EV for “road usage.” The gasoline tax per gallon will also double to $0.38 so our gasoline-driving buddies also get screwed out of more money. Even though gas vehicles are also getting a tax increase you should realize that their tax is a mileage based tax whereas the EV tax is a flat value. This makes things a bit more difficult to compare.

Consider the average gas car that is driven 12,000 miles per year. At 30 mpg this requires 400 gal of gas and at 20 mpg would require 600 gal of gas. The $0.38/gal tax means the 30 mpg vehicle will pay $152 per year while the 20 mpg vehicle will pay $228 per year. Obviously the more fuel efficient your car is and the less you drive the less your tax will be; this also makes sense from a “fairness” perspective. This range of $150-250 serves as a reasonable estimate for how much a gas car will pay in tax in a year.

The EV has a flat tax of $100 so it’s kinda hard to compare. If you think about it the farther you drive an EV the more mileage your getting out of your $100 fee. So going with that train of thought, let’s get some per mile tax values to see how far you need to drive your EV to break-even with a gas vehicle.

The 30 and 20 mpg gas cars will pay 1.3 and 2 cents per mile driven. This value also shouldn’t change based on how far you drive because the tax is already mileage based; you drive more and you pay more. Easy. An EV would have to drive 5,000 miles to pay an average of 2 cents per mile, and 10,000 miles to pay 1 cent per mile. In short it’s still cheaper than paying a gas tax if you drive at least 7,500 miles or so and this number only increases the farther you drive. At least the tax seems “fair.”

Why didn’t I use eMPG — the equivalent mpg of an EV to a gas car — to crunch these numbers? I didn’t do that simply because it didn’t make any sense. Just because your EV gets 90 eMPG doesn’t mean that you can get a third less of a gas tax because of it. Sure you are using a third of the energy but these vehicle taxes aren’t taxes on energy usage in the first place. But is there a way you could use gas and electricity to pay less tax? Yes, as this new law has a pretty damn big loophole if you glance at it for a few moments. Hybrids and plug-in hybrids pay a $150 registration fee. The cheapest way to work this new law would be to buy a plug-in hybrid and use it on electric mode as much as you can. By doing this perfectly you can skip the $100 EV fee and — if done correctly — not pay any gas tax. I doubt most people will do this immediately but going forward I could see people purchasing vehicles in this category because the savings on taxes are possibly a few hundred dollars per year.

These new taxes seem fair to the EV user even though they are quite a large increase from what we’ve had. I’d say we’ve been spoiled for awhile so being forced to pay taxes is kinda crappy. If you have an EV and drive at least 5,000 miles per year your getting equal usage out of your car tax-wise that a 20 mpg vehicle does and anything more than that you basically lower the amount you pay in tax based on mileage. If anything this should prompt us EV owners to drive even farther and use our gas vehicles even less!

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