As the federal government and some provinces incentivize people to move toward electric vehicles, Saskatchewan is introducing a new tax on them — leading environmental and tech advocates to question the message it sends.
The new annual $150 “road-use fee for electric vehicles” was included in Saskatchewan’s 2021-22 budget document released on Tuesday. It comes into effect on Oct. 1 and will be payable through SGI at the time of registration.
“It is a disincentive when so many other places are offering big incentives for people to drive electric,” said electric vehicle owner Matthew Pointer on Wednesday. He is also the president of the Saskatchewan Electric Vehicle Association.
He said the uptake in the technology is slow but steady in this province. However, by his estimation, the number of electric vehicle drivers in the province remains marginal, with only about 400 on the roads.
“We’ve got no formal electric vehicle strategy. We’ve got no charging infrastructure that’s being built out by the province of Saskatchewan. We don’t really have a lot of good reasons for people to adopt an electric vehicle here,” Pointer said.
He worries the tax will just be another deterrent.
“The 400 electric vehicles that we have here in Saskatchewan are only going to raise $60,000. By some people’s estimates, the cost of administrating that fee is actually going to outweigh the benefit of the road tax,” Pointer said.
In the document, the government said the new electric vehicle tax goes toward “improving tax fairness,” noting that electric 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.”
To back up the point, the government provided 2019-20 figures that show road maintenance costs of about $616 million from that fiscal year compared to fuel tax revenues of about $454 million.
Peter Prebble, Saskatchewan Environmental Society board member, pointed to federal programs to promote the electrification of transportation as well as subsidies and rebates linked to uptake in places like British Columbia and Ontario.
“We don’t have these kinds of incentives here in Saskatchewan and at the same time, we’ve now got a new impediment,” Prebble said. “It’s really the wrong message to people because we want to be encouraging the use of electric vehicles.”
While he noted the fee is likely not big enough to actually deter someone considering the purchase of an electric vehicle, he said he doesn’t foresee it encouraging other people to go that way either.
Electric vehicles typically have higher price tags than those that run on gasoline.
Prebble said that a better time to introduce taxation on them would be when those costs come down.
“Then we can have a conversation about how electric vehicle owners contribute to maintaining the road system,” he said, predicting at best, that’s another five to eight years away.
Aaron Genest, the president of SaskTech, an organization that promotes the tech sector’s interests in the province, said that overall, the budget seemed to paint an encouraging picture for his industry.
“So it’s a little bit odd that there’s a line item that is taxing one of the more innovative technologies beginning to take its place in Saskatchewan,” he said.
Genest said the tech sector’s labour force “relies heavily on people who are interested in adopting new technologies and participating in the energy transition.
“By sending a message that this is something that is not going to be as valued, perhaps, by the government, it makes it complicated to attract our employees or potential employees,” he added.
For now, the tax only applies to passenger electric vehicles, but the government noted it is considering expanding it to commercial vehicles and inter-jurisdictional trucking. It is also looking at options to tax at charging stations.
“Now, that’s actually something that I might support because that actually is then based on consumption,” Pointer said.
“If people are charging up their electric vehicles to then be used on roads and that money was then used toward road maintenance, that is something that we would support as long it was a fair tax — something similar to what gasoline vehicles might pay at the gas pump,” he said.