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Vermont to charge e-vehicle fee to offset diminishing gas tax

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(The Center Square) — Vermonters who drive electric vehicles will be hit with a new fee next year under a bill signed into law by Vermont’s Republican Gov. Phil Scott, which is aimed at replacing diminishing revenue from the state’s gas tax.

Under the new requirement, tucked into an omnibus transportation bill approved by lawmakers last month, e-vehicle drivers will be charged an annual fee equal to the amount they pay for their state vehicle registration — $98 — beginning in January.

Lawmakers said the new fee is aimed at offsetting the loss of revenue to the state’s coffers from diminishing gas tax revenue as more people ditch their fossil-fuel-powered vehicles for electric cars and trucks.

“Vermont will continue to contend with transportation funding shortfalls due to decreased motor fuel tax revenue, on both gasoline and diesel, due to increasing vehicle fuel efficiency and the continued adoption of plug-in electric vehicles,” the bill’s authors wrote in a summary.

Legislative leaders plan to use the money generated from the new fee—projected at $915,000 in the next fiscal year and $1.7 million in fiscal year 2026—to install e-vehicle charging stations at businesses and multifamily housing developments.

There are 12,754 plug-in electric vehicles registered in Vermont, 58% of which are all-electric vehicles powered solely by a battery, according to data from the Vermont Agency of Transportation. Plug-in hybrid models account for 42% of the total and can run on both electricity and gasoline, the agency said.

Plug-in electric vehicles accounted for about 10% of new light-duty vehicle sales in 2023, according to the Vermont Vehicle and Automotive Distributors Association.

Environmental groups pushed back on the fee proposal, arguing that the move would deter people from switching to e-vehicles. They pressured Scott and legislative leaders to set a threshold of 15% e-vehicles on the roads before triggering the new fee. The threshold was set in Vermont’s 2021 Climate Action Plan, which calls for expanding e-vehicles to reduce the state’s greenhouse gas emissions.

“We understand we might be near that mark – but we’re not there yet,” the Vermont Natural Resources Council, Sierra Club and other green groups wrote to state lawmakers in April, when the measure was still being debated. “We all agree that electric vehicles must help pay their fair share for Vermont’s road and highway networks. We urge enactment of a fee once that threshold has been firmly established, not before.”

Vermont has been trying to convince drivers to switch to e-vehicles by raising income eligibility for incentive programs, increasing the number of participating households, making the types of EV models available, and offering higher incentive amounts.

Under the state’s Replace Your Ride program, it offers $5,000 for those who trade their gas or diesel vehicle for a cleaner alternative. The MileageSmart Program provides a $5,000 incentive to Vermonters to replace a flood-damaged vehicle. The program launched in 2020, and currently provides up to 25% of a vehicle’s price to help low- and middle-income individuals purchase a used, fuel-efficient vehicle.

Nearly half of the state’s greenhouse gas emissions come from trucks and personal vehicles, and state environmental officials have targeted vehicle emissions to reach climate-change goals to reduce greenhouse gases that scientists say are contributing to a warmer planet.

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