The Michigan House Transportation and Infrastructure Committee voted this week to refer a package of bills out of committee that would impose a per-mile tax on some large commercial electric vehicles.
The bills, which were introduced by state Rep. Pat Outman (R-Six Lakes) and had some Democratic support, would impose a tax on the electricity used by most commercial electric vehicles with more than three axles or a gross weight of more than 26,000 pounds. This excludes recreational vehicles, school buses, or trucks and tractors that are owned by farmers.
This year, Michigan changed how it imposes taxes on gas. The state got rid of its 6% sales tax on motor fuel and increased the per-gallon tax from 31 cents to 52.4 cents. Currently, Michigan drivers with personal electric vehicles pay a higher registration fee since they don’t pay this gas tax. However, large commercial vehicles that are not registered in Michigan don’t have to pay.
At a committee hearing earlier this year, Outman said trucking is more complicated than recreational vehicles, since semi-trucks often have to cross state lines and don’t pay Michigan’s registration fee.
“With interstate trucking and other complexities, this is not as simple as applying an enhanced registration fee like we do for personal electric vehicles,” he said.
Outman said he and his team looked at similar laws in other states, finding Indiana's tax formula, which relies on a per-mile tax and not a per-kilowatt-hour tax, to be the simplest.
Michigan’s proposed tax would be based on a formula that would use the gas tax rate by calculating how many gallons of gas the vehicles would have used if they were gas powered.
Outman said this would make sure all trucks are responsible for helping to maintain Michigan’s roadways.
“Electric semi-trucks, however, can currently operate without contributing under that same structure, and that creates an obvious fairness issue and also a long-term road funding issue,” he said. “These bills fix that, and they do it in a careful manner.”
The number of electric commercial vehicles is low, but continues to grow. Outman said Michigan needs to be proactive.
“If Michigan fails to modernize this system now, we face a future where diesel use continues to decline, electric freight continues to expand, and road funding steadily erodes. None of that is sustainable. These bills ensure that as technology evolves, road funding adapts without shifting the burden onto families, taxpayers, or small businesses,” he said.
Rick LaRose, deputy director of the International Fuel Tax Association, also spoke in support of the bills. The IFTA is in charge of managing the International Fuel Tax Agreement, which simplifies fuel use tax reporting when carriers cross state lines. They collect data on trucks that go across state lines, and then make sure each state is compensated for the miles driven on their roads. The proposed tax would follow the same system.
Despite a slowed demand for electric vehicles, LaRose predicts the downturn is temporary.
“The time to do this is now,” he said. “There has been, as we all know, a bit of a pause in the acceleration, if you will, of electric vehicles coming into the market. That is just a pause.”
Justin Carpenter, director of policy at the Michigan Energy Innovation Business Council, and Chase Attanasio, policy manager at Clean Fuels Michigan, gave neutral testimony on the bills, but expressed support for the concept of the bills.
“As industry voices, we wanted to express our mutual interest in ensuring that Michigan meets that challenge in a fair and balanced manner for drivers and vehicles of every class and fuel type. The approach of this bill package in matching the tax treatment of electric motor carriers to that of their diesel counterparts is a sensible and fair approach."
