Michigan lawmakers are considering eliminating the state sales tax on gasoline and replacing it with a higher gas tax. Supporters of the bill say it would keep prices at the pump steady and create more reliable funding for Michigan’s roads.
But because electric vehicle owners don’t buy gas, their annual registration fee is tied to the gas tax, meaning it could rise by about $100.
Right now, EV drivers pay a $160 annual registration fee in lieu of gas taxes. Jane McCurry, executive director of Clean Fuels Michigan, said she supports road funding too, but wants the formula changed so EV drivers aren’t paying more than drivers of gas-powered vehicles.
“And there’s a formula written into statute,” said McCurry, “that electric vehicle tax increases $5 for every cent that the gas tax goes up.”
Michigan has about 8 million registered vehicles, but only around 1% are fully electric. That’s about 85,000 vehicles.
Michigan’s Healthy Climate Plan, along with campaigns like MI Clean Cars 2030, set a goal of 2 million electric vehicles on the state’s roads by 2030.
But McCurry noted that even as the state pushes for more EVs, the fees drivers already pay make up only a tiny share of Michigan’s road budget – and she said raising them further would barely move the needle.
“Even if we were to increase EV taxes on Michigan drivers by $100, it would make up less than a quarter of a percent of all of the annual funding going toward Michigan roads,” said McCurry. “So, it’s just not a good place to look when we’re trying to increase the total pot of funding here.”
Advocates say lawmakers should revise the formula in any road funding deal to ensure fairness as the state works to remain a leader in the auto industry’s transition to clean energy.