California is the nation’s largest market for electric vehicles (EVs), and the increasing adoption of battery-powered cars is impacting the state’s budget due to a reliance on revenue from gasoline taxes to fund road maintenance. To address this issue, lawmakers are considering replacing the gasoline tax with a new mileage-based tax system. A pilot program for this new tax system is set to launch in August 2024.
According to Lauren Prehoda, a spokesperson for Caltrans, maintaining California’s road network costs approximately $8.5 billion annually, with the majority of funding coming from gasoline taxes. The rise in EVs and hybrids in California has led to a loss in revenue, with an estimated 1.1 million electric cars and 1.3 million hybrids on the state’s roads in 2022.
With California planning to ban the sale of gasoline-powered cars by 2035, the state’s gas tax revenues are expected to decline significantly. To address this revenue gap, Caltrans is proposing the California Road Charge, a mileage-based tax system that would tax motorists based on the number of miles driven annually. While the specific rate is yet to be determined, a cost simulator on the program’s website outlines potential rates of $.02, $.03, and $.04 per mile.
The California Road Charge system offers flexibility for motorists to choose how their mileage is tracked, whether through an electronic device in their car, the car’s built-in tracking system, or by submitting a picture of the odometer. Participants in the pilot program, who will be selected in July 2024, will make monthly Road Charge payments between August 2024 and January 2025 and provide feedback through surveys. As an incentive, participants may receive up to $400 in gift cards.
The data collected during the pilot program will inform lawmakers on whether the Road Charge should replace the state’s gasoline tax in the future.
FAQ
How will the California Road Charge impact EV drivers?
EV drivers may end up paying more with the California Road Charge system as they are not currently paying gasoline taxes.
Conclusion
The California Road Charge pilot program aims to address the budgetary challenges posed by the shift towards electric vehicles in the state. By testing a mileage-based tax system, California lawmakers seek to ensure sustainable funding for road maintenance as the transition to cleaner transportation continues.
