EVs do not currently contribute to highway maintenance through the provincial fuel tax.
The Saskatchewan government will implement a new tax for passenger electric vehicles, according to its 2021-22 budget.
The announcement was made Tuesday. The new $150 annual tax on passenger electric vehicles (EVs) will take effect Oct. 1, 2021.
In a press release, the government said the reason for this tax is that EVs do not contribute to highway maintenance through the provincial fuel tax, which is meant to preserve and improve Saskatchewan’s highway system.
According to the province, throughout the government’s 2019-20 fiscal year, road-use fuel tax revenues totalled almost $454 million. However, road maintenance expenditures totalled nearly $616 million.
While EVs are gaining in popularity throughout Canada, purchases of the vehicles remain low in Saskatchewan.
But the province says those numbers are increasing in number every year.
“These vehicles contribute to wear and tear on provincial roadways, but because they do not consume traditional fuels they are not contributing to highway maintenance through the provincial fuel tax,” said the province in the press release.
Jim Farney, director of the the Johnson Shoyama Graduate School of Public Policy at the University of Regina, says the provincial government’s decision to roll out the EV tax is a political “coin toss.”
“The imagery on that is probably not great. But there’s a policy argument that you might as well make that change before there’s many electric cars around,” Farney said.
Regina Mayor Sandra Masters said the province’s new EV tax is the opposite direction of where Regina is aiming to go environmentally.
“I think we have another infrastructure problem as it relates to powering. If everybody switched to electric vehicles … powering those electric vehicles … there’s implications on the on the grid itself. And that’s going to need to be funded,” Masters said.
“And so it does seem to be difficult in terms of taxing where we’re trying to go. But at the same time, where we’re trying to go is going to be a massive investment required. And so it needs to be paid for.”
The Queen’s city has committed to becoming a renewable city by 2050. City council voted unanimously in support of this decision in October 2018.
Part of the renewable energy mandate is encouraging more environmentally conscious transportation in order to reduce greenhouse gas emissions.
The new EV tax will be collected by SGI when the EV is registered.
EVs cost more than regular fuel vehicles, and buyers pay the standard 6% PST on a new vehicle. This means that new EV owners pay more PST on their vehicles than other new owners of regular fuel vehicles.
Meanwhile, the province says it will continue to examine the future potential for expanding the EV tax to commercial vehicles and inter-jurisdictional trucking.
The province will also consider options to apply a tax at EV charging stations.