The Alberta government has announced in its 2024 budget that a $200 annual tax will be applied to electric vehicles as early as January 2025.
The tax will be paid when owners register their vehicles and will be in addition to the existing registration fee. The tax rate is in line with the annual fuel tax paid by drivers of gas vehicles, said the Alberta government.
The tax will not apply to owners of hybrid vehicles.
“EVs tend to be heavier than similar internal combustion vehicles and cause more wear and tear on provincial roadways while their owners pay no fuel tax,” said the Alberta government.
Although revenue from fuel taxes is not explicitly dedicated to the construction and maintenance of provincial roads, concerns remain over fairness as fuel tax revenue declines.
The tax is expected to generate $1 million in revenue for the 2024-25 year. The revenue will increase substantially as EV adoption is expected to accelerate, reaching $5 million in 2025-26 and $8 million in 2026-27 according to government projections.
More details about the EV tax will be made available when legislation is introduced in fall 2024.
The Alberta government said that it will continue to review the sustainability of the fuel tax, including the increasing use of alternative fuels, and consider changes to protect tax revenues.
The federal Liberal government outlined its plan to phase out gas vehicles by mandating that at least 20% of new vehicles purchased be electric by 2026, 60% by 2030, and that all new vehicles purchased are electric by 2035.
Despite this promise, customers have been growing wearier of EVs, causing them not to sell. A June 2023 survey found that 66% of Canadians said they were unlikely to consider buying an electric vehicle for their next car purchase, 13% higher than the 53% who felt that way in 2022.
Interest in purchasing electric vehicles among Canadians has seen a decline, dropping from 47% to 34%, a trend largely attributed to the fact that electric vehicles encounter 79% more problems than gas vehicles.
EVs also come with a hefty price tag, while Canadians struggle with the cost of living. EVs have an average price tag of $73,500, according to Canadian Black Book, more than $6,000 higher than gas-powered vehicles.
Alberta Premier Danielle Smith has been vocal in the past against any EV mandates and federal electricity regulations. She said that Alberta’s electric grids are not equipped to handle the demand that a forced full-scale transition to EVs would need.
However, she said that the federal government helping provinces develop infrastructure and advanced technologies suitable for Canada’s long distances and cold weather could encourage more Canadians to drive EVs.
Some municipalities have distanced themselves from EVs. Saskatchewan’s town of La Ronge concluded that adopting electric vehicles for municipal use didn’t make sense and posed too many risks, especially related to emergency use.
St. Albert, a municipality from within Alberta, faced criticism for overpromising and underdelivering on the capabilities of expensive electric bus fleets.
