Electric vehicle owners in Minnesota currently pay a $75 surcharge on their tab fees in lieu of the gas tax. A bill passed this week in the Senate Transportation Committee that would tax EVs at 5.1 cents per kilowatt hour, which would end up costing the average EV driver $273 in annual taxes. This is over $70 more than the average driver of an all-gasoline vehicle pays in gas tax for the same number of miles driven.
This new tax fails to establish an equitable user fee for both gas and electric vehicles, which would ensure all drivers pay their fair share. A user fee for both gasoline and electric drivers based on vehicle weight, miles driven, and degradation of roadways would make the funding of our public transportation infrastructure by all who use it truly equitable.
The Legislature needs to have broader conversations about the taxation of vehicles and incorporating the environmental benefits of driving EVs into these rates. This proposal would overtax EV drivers and fails to incentivize more Minnesotans to transition to clean energy vehicles. The bill would also result in Minnesota requiring EV drivers to pay twice as much in taxes as Iowa EV owners, who will pay 2.6 cents per kilowatt hour effective July 1, 2023. There are also many administrative questions surrounding this proposal, for example, how utilities will measure and collect electricity usage taxes of EVs at private residences. (SF 1602)