Officials propose new annual fee that could increase costs for drivers: ‘Is there anything [they] can’t tax?’

Lawmakers in Illinois have proposed a new registration fee that would significantly increase the amount that owners of electric vehicles would be required to pay annually, WTVO reported.

What’s happening?

Not having to pay ever-increasing gas prices and the gas taxes that go along with them has long been one of the main financial perks of driving an EV. However, as more and more drivers switch to EVs, policymakers have feared a drop in gas-tax revenue, which is often used to pay for things like road maintenance.

The Illinois proposal would use a different method to charge EV drivers, increasing the annual EV registration surcharge from $100 to as high as $320, according to WTVO. Alternatively, EV drivers could choose to instead pay 1.5 cents per mile driven.

Why is it important?

As more and more people switch from gas-powered to electric vehicles, the physical infrastructure and financial models that have been built around internal-combustion engines will need to be updated and modified. This includes replacing gas stations with charging stations and finding new ways to fund roadway construction and maintenance.

However, with federal tax incentives to drive EVs having ended years before originally planned, and more states looking for new ways to tax EV drivers, many have been wondering whether buying an EV still makes financial sense.

To find out, one curious YouTuber looked into the cost of ownership of an EV versus a gas-powered car for one year and found that the EV allowed them to save thousands of dollars on gas.

Still, rising EV taxes and fees could cut into these savings, potentially hurting the growth of the EV market.

Commenters on Facebook had mixed reactions to the Illinois proposal.

“Is there anything [they] can’t tax?” asked one commenter incredulously.

“That’s fair,” added another. “EV needs to be taxed differently.”

What’s being done about it?

If fewer drivers are paying gas taxes, states will need to find alternative ways to fund roadways and other projects. However, it is important to do so in a way that does not feel like it is punishing people for driving EVs.

The Illinois proposal of raising registration fees, which would take effect in 2027, is one potential option. If the Illinois bill passes, other states could end up following suit.

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Source: Officials propose new annual fee that could increase costs for drivers: ‘Is there anything [they] can’t tax?’