Photo attribution: elycefeliz
Yes, the same political ruling class which arrogantly passes legislation and regulation cudgeling constituents to adopt EVs versus exercising the right to drive the automobile of their choosing, has figured out the net financial impact of manipulating the car market is that government will likely lose the sizeable tax revenue it previously collected in gasoline taxes.
Without all those emissions spewing internal combustion powered cars running around won’t the government save millions of dollars currently being spent combatting climate change and remitting pollution? Wouldn’t the loss of gasoline tax revenue be offset by the savings achieved by being kinder and gentler to our environment? Apparently not.
New Jersey Governor Phil Murphy has enacted a new electric vehicle (EV) road tax, set to be the highest of such taxes in the United States. Starting in July, EV owners in New Jersey will have to pay a yearly $250 fee. This fee will rise by $10 yearly until it hits $290 in 2028. This move aims to compensate the State for the loss of fuel tax revenue. Moreover, New Jersey charges four years of registration fees upfront for new EV vehicles, and the new EV road tax will be included in that initial payment. Thus, from July, the cost to purchase or lease a new EV in New Jersey will increase by $1,060, exacerbating the obstacle already posed by consumers grappling with the higher purchase price of EVs.
To add insult to EV owner injury, while EVs currently constitute a mere 1.8% of the total light vehicle fleet in New Jersey, therefore the gas-tax revenue lost due entirely to the adoption EVs should also be minimal; the amount of fees slated to be paid by EV owners and leasers is estimated to be twice the fuel tax revenue lost. Put another way, NJ will be collecting twice in fees what they should be losing gasoline tax losses specifically due to EV adoption.
But wait, there’s more! Since 2004 New Jersey has offered a sales tax exemption for battery electric vehicles (BEVs) which has served in the past to be a significant incentive for NJ residents to purchase EVs over traditional internal combustion cars. This exemption is set to begin phasing out over three years.
New Jersey also offers a ChargeUp EV incentive program with up to $4,000 at the point of sale for electric vehicles. Established in 2020, the program is supported by an annual $30 million budget from the Board of Public Utilities. Due to high demand, the allocated funds are usually depleted before the year ends, resulting in the program’s suspension each year until the next year’s funds become available. The program aimed to benefit dealers and EV buyers has been faced with insurmountable administrative challenges. Since the incentive only exists when funds are available, it makes it difficult for both dealerships to offer and consumers to count on the monies, subject to when the next replenishment will take place.