Charging Station “Usage Taxes” Could Slow the Growth of EVs

Author:
Jason Lomberg, North American Editor, PSD

Date
02/06/2024

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Jason Lomberg, North American Editor, PSD

­A sensible way to preserve tax revenues or a barrier to progress? That’s the question plaguing Kentuckians, as the Bluegrass State has enacted a use tax on public EV charging stations.

EVs and hybrids will help fulfill a number of environmental goals, reducing fossil fuel consumption and cutting emissions. But a lower appetite for gasoline causes a drop in tax revenue. And that terrifies lawmakers.

So they raise gas taxes, enact a “highway use equalization tax,” and in several states, levy taxes on EV charging stations. The latest is Kentucky – starting January 1, 2024, and according to the Department of Energy, EV charging station owners and lessees must pay a combined excise tax and surtax fee of $0.03 per kilowatt hour of electricity used to charge EVs.

Naturally, this added fee will be passed on to consumers, and free charging stations installed after June 30, 2022 will be subjected to the same tax.

If you think this could partially delay the proliferation of EVs, you’d be right – consumers are already grappling with EV “break even points,” and this won’t help. But it could also have a far more immediate effect.

"The biggest concern is that it basically is not going to bring in the revenue that makes it worth the expense, so you're going to see people stop providing public chargers," said Lane Boldman, executive director of the Kentucky Conservation Committee.

Perhaps Walmart and Starbucks can shrug off the expense, but your local church or library might be reticent to offer free charging with the added fees.

It’d also point out that Kentucky and at least 31 other states already address the reduced revenue from gas taxes with a flat, annual fee ($120 in Kentucky) for state-registered EVs. This charging station use tax would be in addition to that.

According to Mike Proctor, a board member of EvolveKY (a nonprofit that coordinates local charging stations), community groups pay $5,000 to $6,000 for installation and $50 to $75 a month in added electricity charges. So even a small increase can be catastrophic.

There’s also the fact that many charging stations, especially the free ones, don’t have meters, and the fees are simply bundled with the rest of the overhead.

Businesses and public venues will either need to install meters – more charges borne by taxpayers or passed on to consumers – or waste time having someone comb through the electricity totals, assess the usage tax, and pay the state. Red tape for the win!

Iowa, Oklahoma, and Pennsylvania either have similar charging station usage taxes (or soon will), and Kansas, Montana, and Nebraska are considering them.

PSD

 

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