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Sask groups ask for delay to electric vehicle tax

Electric vehicle drivers currently do not contribute directly to roads and highway maintenance through the provincial fuel tax.
electric vehicle
Electric passenger vehicles are being purchased in ever-increasing numbers across Canada and around the world
MOOSOMIN - Several environmental groups are asking the Saskatchewan Government to delay taxing electric vehicle (EV) drivers an annual road-use fee of $150. The new road-use fee for EV driver’s was announced by the provincial government on Oct. 1. According to the Deputy Premier and Finance Minister Donna Harpauer, the fee is for EV driver’s to contribute towards roads and highway maintenance.

“Electric passenger vehicles are being purchased in ever-increasing numbers across Canada and around the world,” said Minister Harpauer. “These vehicles contribute to wear and tear on provincial roadways, but because they do not consume traditional fossil fuels, their registered owners are not contributing to highway maintenance through the provincial fuel tax. The 2021-22 Budget included several measures to improve the fair application of Saskatchewan’s taxes, including this new road-use fee.”

Considering Saskatchewan is the first province in the country to introduce this annual road tax for EV drivers, groups like the Saskatchewan Environmental Society, the Saskatchewan Electric Vehicles Association, SaskEV, and the Tesla Owners Club of SK, have joined together to try and push the province to delay this decision. 

“They put a tax on something that’s simply not a problem, there’s only 600 EVs. Why would you go after a tax on 600 vehicles,” said Dr. Joel Bruneau, is an Associate Professor and Head in the department of economics at the University of Saskatchewan. 

He made it clear that the EV tax is inevitable, but wishes for the government to implement it at a time where the number of EV driver’s in the province, has increased. 

EV drivers currently do not contribute directly to roads and highway maintenance through the provincial fuel tax. However Dr. Bruneau says EV drivers do contribute, just in other ways.

“SaskPower is owned by the provincial government, they can direct SaskPower to transfer $150 for each EV in the province. Just tax SaskPower for it, but in some sense the government doesn’t work that way. This tax just goes to revenues, it doesn’t have to be spent on highway maintenance, but right now the government pays about $600 million on highway repairs and only generates $500 million from gas taxes. So it’s already taken $100 million from general revenues to pay for the highways. In some sense this gas tax is directed towards highways, but really it’s insufficient and if they decided not to do any highway maintenance, they would still take the $500 million and use it to pay off other stuff.”

In Saskatchewan, all road-use fuel tax revenue is dedicated to provincial highway maintenance. 

In the 2019-20 fiscal year, road-use fuel tax revenue totalled about $454 million in Saskatchewan, while road maintenance expenditures totalled nearly $616 million. In 2020-21, road-use fuel tax revenue totaled about $397 million in Saskatchewan, while road maintenance expenditures totaled about $717 million.

“A lot of smaller communities don’t have high speed internet connection and that places them at a disadvantage. I think the same thing is going to happen in 10 years, if you don’t have good EV infrastructure then again those places are at a disadvantage,” said Bruneau.

Pre-existing EV fees in the states

Bruneau says that because the number of EV driver’s in the province is low, the annual EV tax from each owner will be “too small of a base” to even make a significant contribution.

“The Saskatchewan Environmental Society argues to just wait until we get to 1.3 per cent of people in the province to have EV’s, so that’s about 10,500 vehicles, before actually implementing this tax.”

Dr. Bruneau said the provincial government should wait until the number of EV drivers has increased before implementing an annual EV tax, just like California has done.  

Currently 19 states have already introduced the annual EV fees for drivers. However California did not introduce the annual EV fees for drivers until the state had about 700,000 EVs on its road, which equals to 1.3 per cent of the state’s population.  

Bruneau said that if EV drivers are expected to pay an annual road fee for owning an electric vehicle, then gas-powered drivers should pay the same owning charge as well. 

“Well, if you’re going to ask an economist, an economist is going to tell you that all cars should be charged two different charges: one for having a car and one for using that car. All cars should pay the $150 fee for having the car, because it’s the same idea right, that if you choose the option to have a car then you should pay but if you don’t drive it, then you shouldn’t have to pay anything. For instance if you’re in Moosomin and there’s a snow event between you and Regina and you do not drive to Regina, are you saying you don’t benefit from snow removal? Of course you are, because if you had to go to Regina you would want the highway cleared. So even if you don’t drive there, you get a benefit from the repair and maintenance,” he says.

“The deal with that is to just charge everyone an annual fee of $150, and you can pro-rate it to engine size or something like that, then charge a usage fee and in those cases, the fuel usage would be included in that usage fee. But to have everything tied to the usage fee and not have an access fee, seems to be mistaken. It’s not that EV owner’s shouldn’t pay $150, it’s that everyone should.”

Tyler Krause, the president of Tesla Owners Club of Saskatchewan also believes the EV tax should be delayed.

“We know that this tax is inevitable, we’ve seen it implemented in other states. However in almost all of those situations, the tax was implemented at a time where the EV population was a lot higher than it is in Saskatchewan,” said Krause. 

“We’ve outlined this in our letter as well that because there’s only 600 electric vehicles, it’s very unlikely that any of the money being raised from this EV tax will have any impact on road maintenance because it’s a drop in the bucket and, they will more likely have to pay more money to administer the tax then it’s going to bring in for many years, so that’s another good reason why it should wait.”

He says another reason why it’s important to delay this tax is because EV driver’s are currently doing their share in paying taxes for their vehicles.

“The provincial government isn’t being fair or honest with how they are coming up with this amount. They’re saying they need it for road maintenance because we don’t pay that 15c/l on gasoline, however we have to pay for our electricity and our electricity is primarily provided by a crown corporation that’s owned by the provincial government.”

Why are EVs important for society?  

Krause talks about what his organization’s goal of encouraging more electric vehicle drivers.

“Our goal is very simple, it’s to accelerate the adoption of sustainable transportation. We want to make sure as many people as possible are switching over to electric vehicles, and it doesn’t mean just Tesla’s, it can be any EV. I always tell people, I don’t care what you buy as long as it’s electric I’m happy,” said Krause.

“A lot of people might ask ‘why are EV’s important, why should we buy them’ and there’s a few reasons but the big reason why people should adopt EV’s is to reduce pollution wand to reduce emissions.” 

“The scientific incentive is that this is a very important piece of the puzzle, we want to start moving it’s incredibly important that we start to move in that direction where we’re not consuming and burning fuel to get around.”

Jason Cruickshank from SaskEV, says highways and roads today, are difficult for electric vehicle driver’s to use because of the lack of charging stations in infrastructure. 

“Directing SaskPower to have a larger role in providing charging stations in the infrastructure because that’s what we’ve seen utilities elsewhere in the country. B.C hydro has significant fast charging networks on their highway system, Quebec hydro also has a significant system implement in their province, Alberta and Ontario as well.”

“We’ve seen a lot of electrical facilities across the country, you know putting in chargers and taking advantage of some of the federal government incentives right now to build out this infrastructure, and we haven’t really seen any movement on that from SaskPower. I think there is significant benefits for them to have a role, just like other utilities in the country have,” said Cruickshank.

Saskatchewan potential leaders in EV technology? 

Cruickshank emphasizes that “an electric vehicle tax creates financial barriers to new low-carbon technologies and sends the wrong message to those looking at investing in our provincial mining industry.”

“There’s a lot of places right now around the world, that are pushing for involvements, obviously the ecosystem is changing a lot, now with more reusable energy coming up online, more battery storage, more electric vehicles, there’s a lot of places pushing for this,” he said.

“We just think this EV tax sends the wrong message and it’s the only EV tax all around Canada, that kind of position’s Saskatchewan as the least EV friendly jurisdiction of the country. At the same time you look at other places like Quebec and Ontario who are really pushing for a piece of manufacturing electric vehicles, but as far as mining as well. Lithium, cobalt, Saskatchewan is home for two-thirds of the minerals that we are going to need as we move towards a zero emission society. We can’t have EV tax weighing it down , when companies in the province are seeking investments, I really think that sends the wrong message and could position us poorly going forward.” 

Another reason why environmental groups oppose the EV tax, specifically SaskEv, is because they believe Canada has the entire supply chain for electric vehicles from raw resources to the manufacturing bases.

“Many of the resources needed for EVs can be mined and processed here in Saskatchewan. Thus, Saskatchewan could be a leader in EV technology,” said Cruickshank.

Jeff Welke, the executive director of communications for the ministry of finance for the Government of Saskatchewan says the province will provide resources to produce electric vehicles. 

“In terms of Saskatchewan possibly being a source of providing EV technology, Saskatchewan’s world class mineral sector is a strategic economic driver for the province, with a globally recognized mining industry, workforce and culture. Global demand for emerging elements, as well as traditional mining products such as potash and uranium, is expected to continue to increase significantly over the coming decade particularly with the increase in manufacture of EVs.”

“Saskatchewan has exceptional resources and with several projects under development in lithium, copper, and other minerals for EVs and clean energy technology, we are well-positioned to benefit from the growth in these markets,” said Welke.