What is the Gas Guzzler tax?

Gasoline Consumption Tax is an additional surcharge added to the sale or lease prices of vehicles that are classified by the Environmental Protection Agency (EPA) as having poor fuel economy ratings. The tax varies according to the efficiency of each vehicle and can range from $1,000 to $7,000. What is interesting, however, is that until now, the gas consumption tax was only reserved for passenger cars. However, it could be used on SUVs, crossovers and trucks in the future.

How does the fuel consumption tax work?

The 2021 Chevrolet Colorado pickup on a mountain road | Chevy

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According to EV adoption, the gas consumption tax is based on a vehicle’s combined city and highway fuel economy value, which must be greater than 22.5 mpg. Each automaker is required to calculate their car’s fuel economy values ​​before the start of sales each year, and then follow EPA regulations to determine the tax for each application model. The actual amount of tax is determined after each model year production run and is based on the number of gas-guzzling vehicles sold that year.

Once this figure is calculated, the overall amount of the tax is paid by the manufacturer or the importer. Here is a breakdown of fuel economy ratings and their taxable amounts:

The breakdown of the fuel consumption tax amount for each vehicle fuel efficiency rating

The breakdown of the fuel consumption tax amount for each vehicle’s fuel efficiency rating. | Fueleconomy.gov

Why does the gas consumption tax not include passenger trucks and SUVs?

Gasoline consumption tax is imposed on new passenger cars, but since trucks, minivans and SUVs were prevalent in 1978 – when the tax was enacted – these vehicles are currently exempt. Doesn’t really make sense, does it? The folks at EVadoption think not including passenger trucks, minivans, and SUVs was an oversight on the part of the EPA, especially since they currently account for a large chunk of market share. vehicles sold today. In fact, in 2019, trucks, minivans and SUVs accounted for 70% of all new light-duty vehicle sales.

Additionally, pickup trucks, minivans, and SUVs typically achieve lower fuel economy numbers than almost all passenger cars today. Here is a table showing the least fuel efficient vehicles produced in the United States in 2018 – as provided by the EPA:

Examples of vehicles that fall under the Gasoline Consumer Tax.

Examples of vehicles that fall under the Gasoline Consumer Tax. | Fueleconomy.gov

Another issue is the weight of the vehicle, SUVs are heavier and therefore less fuel efficient than passenger cars, so it makes even more sense for the gas consumption tax to apply to them.

Will the gas consumption tax ever apply to passenger trucks, minivans and SUVs?

We think so, although that may not be too applicable to most cars in the future, given that all new cars sold should average 40 mpg from 2026. EVadoption echoes those sentiments. and even offers some suggestions for fixing/improving the tax on gasoline consumption. :

  • The tax must include SUVs, minivans and trucks
  • The MPG threshold should be increased to 25 mpg for cars from the current 22.5 mpg and 18 mpg for trucks and SUVs
  • Increase the threshold by 1 mpg every two years
  • Include a weight component in the tax to add an additional penalty for heavier vehicles
  • Create a “Cash for Clunkers” type program to redistribute money raised through gas tax to drivers who have replaced their older cars with newer, more efficient vehicles

These are all exceptional points given that the purpose of the gas tax is to prevent automakers from building less fuel-efficient vehicles. It makes sense that bigger vehicles on the road would face some kind of penalty if they don’t meet US fuel efficiency standards. However, as many automakers shift to building hybrid and electric vehicles in the future, the gas tax may become obsolete altogether. Only time will tell.

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