ST. GEORGE — Cutting the state’s gas tax while also enacting a new fee attached to the use of electric vehicle charging stations passed the House earlier this week. Though the bill’s sponsor says it’s a way to ease the impact of fuel costs for Utah residents, environmental advocates argue it does not place any emphasis on air quality.

Sponsored by Rep. Mike Schultz, R-Hooper, the transportation tax amendments bill, designated HB 301 in the 2023 Utah Legislature, aims to accomplish three points.

The first is to lower the state’s per gallon gas tax from 16.5% to 14.2%, which translates to a 2-cent reduction in the current tax. As engineered by previous legislation, the state’s tax rate is determined annually by the average wholesale rack price of fuel over the last three fiscal years.

Due to inflation triggered by various factors, the state’s gas tax jumped by 4%. Schultz’s bill would cut that in half. He told the House Revenue and Taxation Committee last week that the cut would equate to a $9.4 million tax cut for Utah residents this year as it would take effect July 1 if passed.

Secondly, HB 301 would add a 12.5% tax on the electricity used at electric vehicle charging stations. This translates to about $3 per charge, Schultz said. Moreover, this change is designed to collect taxes from electric vehicle owners who pass through the state, and not necessarily Utah residents, he said.

Schultz pointed to charging stations set to be established along transportation corridors across the state like as a primary target of the bill.

The third item the bill addresses is vehicle registration fees, which would be increased across the board by $5 if HB 301 passes.

“The gas tax increased significantly more than I think any of us or anybody could have anticipated,” Schultz said.

Drop in gas tax

According to the bill’s fiscal note, the state gas tax would drop to 34.5 cents from 36.4 cents. The bill also raises the cap on the gas tax the state set in 2015 that would take effect if wholesale gas prices reached $2.45 per gallon. HB 301 sets the new cap at $2.96 per gallon by 2028. This could translate to the state gas tax being over 40 cents per gallon by that time.

The state’s gas tax is used to fund road construction and maintenance. If passed, the bill is anticipated to reduce the state’s road funds by $35 million in fiscal year 2024 and $31 million in fiscal year 2025.

Supporting Schultz’s bill at the committee hearing was the Utah Petroleum and Retailers Association, represented by lobbyist Gary Thorum. He thanked the efforts of Schultz and others in helping to deal with the inflationary pressures that have impacted the industry.

“After housing, it’s probably the area that has experienced the most inflation,” Thorum said.

Hike in charging fees and opposition

Voicing opposition to the proposed 12.5% tax hike for charging station use were representatives from HEAL Utah, the Utah chapter of the Sierra Club, Citizens’ Climate Lobby and O2 Utah.

Alex Veilleux, a policy associated or HEAL Utah, said the issue of electric vehicles and maintaining road infrastructure funding had already been addressed with last year’s HB 186. That bill set up a road-user charge program, through which electric vehicle owners can either pay a set registration fee or go through the road-use program. The program is capped at the fixed registration fee, meaning that someone who drives less will pay less, yet also does not pay more if they go beyond the capped amount.

“Further tax increases would prove to be punitive for consumers and providers of electric vehicle charging and act as a fixed fee as opposed to the road usage fee in the RUC program,” Veilleux told the House committee.

Charge station operators are already subject to state sales tax and local franchise taxes, he said, adding that HB 301’s proposed fee would result in triple taxation and may prove burdensome for smaller businesses that offer electric charging for free.

“This is just plain and simple bad tax policy,” Veilleux said.

Veilleux and others opposing the bill also said HB 301 puts up a new barrier to the state and its residents in the adoption of electric vehicles and associated infrastructure and fails to adequately address air quality issues for which gas-fueled vehicles are blamed.

Katy Pappas, a Salt Lake City resident, told the committee that transportation bills should include studies on how they may impact air quality and also include ways to address and mitigate them. She also argued that lowering the gas tax will incentivize the spread of polluting emissions from gas-fueled cars while an increase at the changing stations will move people away from wanting to use an electric vehicle.

“The tax should stay at the pump,” she said.

From the committee

Rep. Keven Stratton, R-Orem, asked why Schulz’s bill didn’t charge electric vehicle owners the equivalent of what the drivers of regular gas vehicles are charged.

“I think this is the start of it,” Schultz said. “This is a number that I pegged that I felt was fair across the board. I do think we should do all that we possibly can to make sure that the non-residents that are moving through the state pay their fair share. From my perspective, it’s a good place to see how it’s working.”

While he appreciates the desire to capture revenue from people passing through the state, Rep. Joel Briscoe, D-Salt Lake City, said the increased charge will impact Utah residents as Schultz’s bill did not differentiate between charging stations along the highway versus those found in parking garages or homeowner associations.

“For the most part, it is targeted at the people driving through the state, but there is going to be a little spillover,” Schultz said.

The House committee unanimously passed HB 301 on Feb. 8 and moved to the House floor where it passed 56-11 last Monday. Southern Utah Reps. Rex Shipp, Walt Brooks, Neil Walter, Joseph Elison and Colin Jack each voted in favor of the bill.

The next stop for HB 301 is the Senate Revenue and Taxation Committee.

Check out all of St. George News’ coverage of the 2023 Utah Legislature here.

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