The legislation from Republican Senator John Barrasso of Wyoming would also impose “a federal highway user fee on alternative fuel vehicles,” which would then go into the Highway Trust Fund, according to a committee summary.
According to the Congressional Budget Office, federal fuel taxes of 18.4 cents per gallon of gas and 24.4 cents per gallon of diesel are the primary sources of revenue for the Highway Trust Fund. But with greater fuel efficiency and the growing number of electric vehicles on the road today, there has been a decline in federal fuel taxes collected.
“The electric vehicle tax credit largely benefits the wealthiest Americans and costs taxpayers billions of dollars,” Barrasso said in a statement. “My legislation levels the playing field for all drivers across America.”
Fuel taxes need fixing
Attempts to fix the Trust Fund have centered around raising fuel taxes, even though some officials have suggested there should be another way, including one based on vehicle-miles-traveled. Retiring House Transportation and Infrastructure Chairman Bill Shuster, R-Pa., wrote a bill earlier this year that would raise fuel taxes by 20 to 25 cents per gallon before eliminating fuel taxes in 2028.
The committee has cited reports from the Manhattan Institute, a conservative think tank, that claims getting rid of the tax credit on EVs would save the government an estimated $20 billion over the next decade, while the additional highway fees could add “billions” to the trust fund.
Last year, House Republicans attempted to remove the tax credit as part of its tax overhaul measure, but the Senate nixed that part of the tax bill, keeping the provisions out of the enacted bill. At that time, the Ways and Means Committee estimated removing the tax credit could result in savings of $4 billion over the next decade.
Whether or not the legislation will see full partisan support by the GOP is questionable. Market Watch pointed out that Tesla was also targeted in the legislation and Nevada and California have been strong supporters of the electric car company.
Senate Democrats, led by Jeff Merkley of Oregon, Martin Heinrich of New Mexico and Catherine Cortez Masto of Nevada, introduced their own electric vehicle-focused legislation in September that would extend the tax credit by 10 years. Their bill would eliminate the federal cap that limits automakers to a maximum of 200,000 allowed to use the credit.
