Albertans are conflicted over new $200 tax on electric vehicles

Alberta Newsroom/Flickr | lucasinacio.com/Shutterstock

Albertans are conflicted over the new $200 tax on electric vehicles in the province, which is set to be in place by January 1, 2025.

The tax was announced yesterday during the unveiling of the 2024 budget, with the Province saying although the number of electric vehicles (EVs) in Alberta is currently low, EVs are being purchased in “ever-increasing numbers,” and while EVs tend to be heavier than similar internal combustion vehicles and cause more wear and tear on provincial roadways, their owners pay no fuel tax.

While fuel tax revenue is not dedicated to funding the construction and maintenance of provincial roads, the Province added that there are “fairness concerns with drivers of other vehicles and longer-term challenges associated with declining fuel tax revenue.”

The tax will be paid when owners register their vehicles and will be in addition to the existing registration fee, with the Province touting that the tax rate is in line with the estimated annual fuel tax paid by the driver of a typical internal combustion vehicle in Alberta.

The tax will not apply to hybrid vehicles and more details on the tax will be released when legislation is introduced in the fall.

The announcement spawned quick reactions from Albertans, garnering more than a thousand comments on one Reddit post alone, with a positive and negative reception echoed by many.

Alberta introduces $200 yearly tax on drivers with electric vehicles | Urbanized
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Alberta will join neighbouring Saskatchewan with such a tax, with that province having a road-use charge on electric vehicles that came into place in October 2021.

Some states in the US do the same thing that Alberta is set to bring in: California hits electric vehicle drivers with a $108 Road Improvement Fee (RIF), Indiana has an annual fee of $150, Ohio has a $200 annual fee, and Hawaii electric vehicle drivers pay a $50 annual fee.

Revenue from the tax is estimated at $1 million in 2024-25 and is expected to grow as EV adoption accelerates, reaching $5 million in 2025-26 and $8 million in 2026-27.

Looking to the future, the Province added it will continue to review the sustainability of the fuel tax, including the increasing use of alternative fuels, and consider changes to protect tax revenue.