Op-Ed: NC business leaders: The state gas tax is the wrong way to fund roads
- December 2, 2022
- Posted by: Jacob Rigg
- Category: Blog
The following Op-Ed written by Joe Milazzo and Gary J. Salamido was published in the Raleigh News & Observer, Durham Herold Sun and Charlotte Observer on November 27, 2022.
North Carolina is quickly emerging as a leading destination for the transition to electric vehicles. Thanks to multi-billion dollar investments by companies including Toyota and VinFast, our state will be the home of the newest, cleanest generation of automobile mobility. The transition to EVs — and to hybrid vehicles and increased fuel efficiency overall — means that the days of the gas tax effectively funding our roadways are numbered.
The N.C. Department of Transportation will need new, stable revenue streams to keep our state moving forward. The importance of North Carolina’s transportation network cannot be overstated. Our roads, bridges, ports, railways, and airports provide the pathways that keep commerce moving and connect North Carolina’s businesses and its people to the rest of the global economy. A robust, well-funded transportation network means more high-quality jobs for communities across our state.
As the Tar Heel State becomes increasingly desirable for its economy and quality of life, investments in the infrastructure to move people and products safely and efficiently is critical. Since 2014, NCDOT has charged a fee for EVs, since they cannot pay fuel taxes. The organized regional and statewide business community is elevating a proposal to modernize state highway funding, based on that framework, in the form of a vehicle registration-based access user fee.
The concept is this:
- Raise the annual EV fee (currently $140.25) to what the owner of the typical gasoline-powered vehicle pays in gas taxes over the course of a year (currently around $237);
- Charge all passenger vehicles the same rate — whether electric, gasoline, or hybrid;
- Allow vehicle owners to pay the access fee on a monthly, quarterly, or annual basis; and
- Eliminate all state gas taxes.
- The fee would not initially apply to diesel vehicles, so current truck taxation methods would remain.
With an access fee, everyone would pay the same rate, regardless of the type of vehicle you drive, where you live, or month-to-month variation in travel. An access fee would be analogous to a typical monthly mobile phone bill, which does not vary regardless of minutes used. Drivers who travel further for work and other activities would pay less in access fees than they do today in gas taxes. Transportation fees would be more predictable and stable, for both motorists and NCDOT, even if travel and fuel usage were to drop in a recession or pandemic. Plus, the state won’t have to create a new revenue collection bureaucracy, and North Carolinians won’t have to track vehicle miles traveled.
An access user fee is just one idea to modernize our state’s transportation funding model. Since sales tax is collected on several transportation-related expenses, state leaders recently implemented an allocation of sales tax revenue so that transportation dollars will be dedicated to transportation purposes. Removing the cap on public-private partnerships is another opportunity for consideration. North Carolina’s business community is aligned in working to secure diversified revenue streams to keep our roads, railways, ports and airports well-funded over the next decade and beyond. North Carolina lawmakers and policymakers from both major parties are speaking up about the need to modernize transportation funding.
The NC Chamber, Regional Transportation Alliance, and businesses in our Destination 2030 Coalition remain focused on this priority, and NCDOT’s NC FIRST Commission and legislative initiatives have joined us in identifying workable ideas. Solutions are on the table, and our state needs a bipartisan, 21st century transportation funding model that is durable, equitable, and competitive. Let’s focus on solutions, and let’s keep North Carolina moving.
Gary J. Salamido is the president and CEO of the NC Chamber, the leading business advocacy organization in North Carolina.
Joe Milazzo II is the executive director of the Regional Transportation Alliance, the voice of the regional business community on transportation in the Triangle region.