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Tax credits for electric vehicles are common – but surcharges are just as common

by News Room
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In late February, the Canadian province of Alberta announced that in 2025 it would introduce an annual C$200 ($148; £157) registration tax on electric vehicles. Drivers pay the tax in addition to existing registration fees. Many EV advocates oppose the surcharges, especially now that many North American policymakers are working hard to entice drivers to go electric with tax credits for electric vehicle purchases.

The surcharge may deter consumers from buying an electric car, but lawmakers say it’s not a punitive measure, but an attempt to spread the cost of road maintenance. In Alberta, one of the largest sources of consistent government revenue is the fuel tax, which is collected before gasoline is even delivered to the station. This money usually helps pay for roads, bridges and other public infrastructure. In the eyes of Alberta Finance Minister Nate Horner, the EV tax is simply fairness.

“Because electric car drivers obviously don’t pay fuel tax, this tax is their contribution to maintaining provincial roads and supporting other public services,” Horner said after the budget was released. His government’s budget also mentioned the weight of electric cars – which are generally heavier than internal combustion engines (ICEs) due to their electric motors and large batteries – as part of the government’s decision. Heavier vehicles would have to pay their share of road damage.

Other jurisdictions, particularly in North America, follow this approach. For example, the Canadian province of Saskatchewan charges C$150 ($111; £87) to register an electric car. And in the US, 24 states impose a higher registration fee for electric cars, ranging from $50 (£39) in Hawaii to $200 (£157) in Texas. Six states — including Georgia, Iowa and Kentucky — also collect a tax on charging stations.

Some EV advocates see these fees as short-sighted.

“In the long term, there’s no reason why electric vehicle drivers shouldn’t pay their share of taxes. However, we’re at a point where we’re trying to encourage the adoption of electric vehicles, and that’s obviously counterproductive to that,” says Tim Burrows, president of the Electric Vehicle Society of Canada.

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