Georgia has a new tax planned for EV drivers

The Georgia Department of Transportation is about to launch an experiment with a different form of transportation tax designed to capture revenue from drivers of electric vehicles.

The agency is looking for 150 volunteers to take part in a federally funded pilot project that will replace gasoline and other motor fuels taxes with a tax based on the number of miles driven. Three states – Washington, Oregon, and Utah – already have adopted mileage-based user fees, while at least four others are doing pilot projects to test the concept.

“I’m glad we’re part of this,” Georgia Commissioner of Transportation Russell McMurry told members of the State Transportation Board July 19.

“I don’t think we have a choice,” board member Cathy Williams added. “We’re going to have to go to a mileage-based system.”

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As Georgia motorists increasingly switch from gasoline-powered cars and trucks to hybrids and EVs, the amount of tax revenue available for building roads and highways dwindles. Technological improvements that are yielding higher gas mileage in cars with internal-combustion engines also are putting a dent in transportation tax collections.

A legislative study committee formed last year to look for ways to accommodate an expected increase in electric vehicles plying Georgia highways recommended making any future mileage-based tax the state adopts comparable to what drivers of gasoline-powered vehicles pay in fuel taxes.

That equity issue came to the forefront earlier this year as the General Assembly debated and subsequently passed a bill imposing an excise tax of 2.84 cents per kilowatt hour on electricity used to power EVs starting in 2025.

Electric vehicle owners and other advocates of EV technology complained that the new excise tax -combined with a $216 annual registration fee EV owners already are paying and the state sales tax on purchases of electricity – amounted to triple taxation.

“I’m thrilled the DOT is doing this pilot project,” said Anne Blair, Atlanta-based senior director of policy for the Electrification Coalition, a nonpartisan nonprofit working for the widespread adoption of electric vehicles. “Maybe we can get to something that’s more equitable to more drivers.”

Josh Waller, director of policy and government affairs for the DOT, said the agency will spend the next several months signing up volunteers for the pilot project. He said the four-month pilot will begin late this year and include a survey of the volunteers to gauge how they compare paying a mileage-based fee to the costs of gasoline.

“It’s really about the experience for the user of the mileage-based approach,” he said.

Waller said the test period will be followed during the first half of 2024 by a preliminary analysis of the results. A final report is expected later in the year.

Waller said the pilot project will include both GPS and non-GPS options to keep track of the miles the volunteers drive. The GPS option will determine how many miles a volunteer drives inside of Georgia compared to outside of the state, which is important for taxing purposes.

“Participants will choose what works best for them,” Waller said.

The idea of tracking where people are driving has raised privacy concerns. But Waller said worries about privacy have become essentially moot with the advent of cellphone technology.

“Our cellphones are going with us anywhere,” he said. “There are a lot of pieces of information we’re giving away.”

Nonetheless, Waller said the pilot project will include safeguards to protect the privacy of the drivers.

Waller said he doesn’t expect the various pilot projects states are conducting to lead to widespread adoption of mileage-based user fees anytime soon.

“This is a major change in how you fund transportation,” he said. “[The pilot projects] are really to understand how people react with it. … At this point, we’re still in the educational phase.”

“Every state is different,” McMurry added. “We’ll learn things that are unique to Georgia.”