Many small-business owners are turning to electric and hybrid vehicles as they replace older or inefficient fleet vehicles. These automobiles can significantly limit the amount an entrepreneur spends on gas when completing direct store delivery, particularly if they are used in conjunction with routing software. However, new taxes could limit their cost effectiveness.
Fleet owners could face a new expense
While these vehicles have been traditionally seen as a cost-effective way to manage fleet expenses, they could become more expensive to use in the coming months. Several states are considering taxing hybrid and electric vehicles, since those who drive these cars are often able to get around with little gas, and thus aren't impacted by gas taxes. According to legislators, these fees are critical to maintaining the nation's infrastructure and ensuring roads are in good condition for those who use them. Lawmakers have voiced concern that some individuals or companies that use local roads frequently may be getting away without paying to maintain them.
According to research from the Institute on Taxation and Economic Policy, state and local gas-tax revenues have plummeted in recent years, as fuel-efficient vehicles, electric cars and hybrids have become more common. Revenue fell 7 percent to barely $38 billion between 2004 and 2010.
With state and local revenue from gas taxes dropping steadily, governments are looking to recoup some of this lost money. Several states, including North Carolina, Virginia, New Jersey and Washington, have proposed or passed legislation that would charge hybrid and electric vehicle owners to make up for the decline. According to Bloomberg, those driving electric vehicles in Washington state are already paying an annual fee, while those who own environmentally friendly cars will soon be required to do the same in Virginia. New Jersey lawmakers recently proposed an annual charge for those who purchase electric cars, and other states have also investigated similar taxes.
Cutting costs further
Business owners already face a myriad of expenses. The potential for yet another tax could be a daunting prospect, especially for entrepreneurs who replaced older fleet vehicles with hybrid automobiles specifically to cut down on expenses. To further reduce fuel spend and mitigate the potential extra costs brought on by hybrid vehicle taxes, some entrepreneurs may look to route optimization software to help them complete direct store delivery runs and keep schedules as short and fuel efficient as possible.