Virginia repeals the Prius tax
Last year Virginia did something interesting. Instead of taxing its gasoline at the pump in the manner most are familiar with, it instead decided to tax gasoline at the wholesale level. Yeah!, We don’t have to pay the gas tax! Not quite. The 17.5 cent per gallon tax was replaced with a 3.5% wholesale gas tax which is then passed onto consumers by station owners. There were a lot of other changes too, one of which was a new tax on the registration of any hybrid, electric, or alternative fuel vehicle. It started out at $100, but before implementation, political compromises reduced that to $64.
The idea of taxes of this type that hit just green vehicles is that since the new greener cars use less fuel, they should pay more taxes to offset the reduction in gasoline tax they pay. Usually the gas taxes are called by politicians “road and bridge repair taxes.”
There are a number of problems with targeting hybrids. First, as the Washington Post pointed out, some hybrids use more gas than non-hybrids. For example the hybrid Lexus 460 L AWD gets just 18 mpg combined. The non-hybrid, similarly sized Lexus ES 350 gets 24 mpg combined. Therefore the logic behind the hybrid tax is flawed. Also, who are we kidding? States, municipalities and the federal government use the tax on gasoline to pay for whatever they choose, including, in Massachusetts for example, hundreds of millions of dollars to subsidize subway and commuter rail trains. Let’s not pretend that the taxes on gasoline, or cars in general, are used exclusively to pay for “roads and bridges” as the narrative usually portrays.