Province's 'fair' Electric Vehicle Tax based on foul Math

Nov 10th, 2021 9:34 AM

New research reveals the self-described "fair" Electric Vehicle tax is anything but.
EV owners pay almost double to the Province than gas-powered cars.

Charity Extends Tax Refund for another Month.


(Saskatoon, November 10, 2021) The $150 annual tax on electric vehicles (EVs) is itself unprecedented in Canada: on October 1st, Saskatchewan became the only Canadian province to tax EVs. Now, as the world meets in Glasgow for an urgent international climate conference (COP 26), new evidence and calculations reveal that Saskatchewan EV owners pay over $240 in profit to SaskPower when they charge their EVs at home. As a Crown Corporation, that's money to the province on top of the extra EV tax on the car itself.

"Nobody enjoys paying taxes, let alone twice for the same thing. This is unfair." says Burkhard Mausberg, President of the Small Change Fund. "While EV ownership should be celebrated to deal with the climate crisis, the Saskatchewan government launched a witch hunt on EV owners and is now double-billing them." Per the new findings, the average gas-powered car driver is paying $204 annually through the fuel tax. EV owners now pay $394 through their equivalent fuel source and the EV tax. "Rather than an extra tax, EVs should get a subsidy!"

In response, the Small Change Fund - a national charity - offers to refund EV owners in the province the $150, while encouraging them to donate the rebate to either the Saskatchewan Environmental Society or the Lung Association of Saskatchewan. These charities work to improve the environment and health of Saskatchewanians - exactly what EVs do.

Many EV owners have applied for the refund, often opting to support the Saskatchewan charities and raising thousands of dollars. Because of this, the Small Change Fund is extending the refund to November 30th, 2021. More information is available at https://sidewalktax.ca/get-tax-back/.

"We're acting to correct the government's wrongheaded attack on the good people who've bought clean electric vehicles. And now we have exposed how much EV owners already contribute to the provincial treasury," says Mausberg. "What's unfair is charging EV owners almost double."

For more information, contact Burkhard Mausberg, (416) 898 9510.

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The Hidden Contributions Electric Vehicle Owners Make

What the Saskatchewan Government doesn't want you to know.

by
Small Change Fund

November 2021


Introduction

On October 1st, the Saskatchewan government implemented a $150 tax on electric vehicles (EVs) to mimic the fuel tax paid by internal combustion engine (ICE) vehicles. The tax was announced in the 2021-2022 Saskatchewan Provincial Budget in April 2021.1 When announced, the province stated it anticipated collecting $60,000 annually from the then 403 registered EVs in Saskatchewan.2

Warren Kaeding, Minister of Environment, spoke in support of the tax: "This is the start to recognize that we need to have fairness across the system as everybody contributing to road maintenance and repair."2 At the same time, Kaeding confirmed that the province has no plans to introduce incentives for purchasing or driving electric vehicles.2

The Saskatchewan government claims the EV Tax is predicated on ensuring equal contributions from EV and ICE drivers. Yet, this argument falls apart once you consider the contributions EV owners already make towards provincial coffers.

In fact, we found that the average Saskatchewan driver who owns an EV and charges at home is already contributing about $244 of their total "fueling" costs directly to the province.

Electricity Supply

SaskPower is Saskatchewan's primary supplier of electricity and is owned by the provincial government through its holding company, Crown Investments Corporation.3 SaskPower provides electricity to the entire province, except for the city of Swift Current and part of Saskatoon.4

Electric vehicles can be charged at home using existing infrastructure. When an EV driver charges at home, the cost of charging their vehicle is added to their residential electricity bill.

Annual Fueling Costs

According to Transport Canada, light vehicles in Saskatchewan drive an average of 15,300 km per year.5 The average fuel efficiency in Canada is 8.9 litres per 100 km;6 the average cost of fuel in Regina last year was $0.995/L.7 Using these numbers, the average ICE driver in Saskatchewan will buy roughly 1,360 litres of fuel, for a total of about $1,355 in fueling costs a year.

Assuming EV owners also drive 15,300 km per year, at an average energy efficiency of 210 watt-hours per km,8 they use some 3,213 kwh per year of electricity to drive their car. Per SaskPower's annual report, the average residential customer pays $0.186 per kwh,9 so an EV owner who drives 15,300 km per year and charges at home pays $597.62 per year to power their vehicle.


Difference in annual fuel costs for EV and ICE vehicles ($/year).

SaskPower Profit Margins

Since the infrastructure to charge electric vehicles in Saskatchewan is already in place, SaskPower does not incur any new infrastructure costs from EV owners charging at home. The only cost SaskPower incurs, therefore, is the marginal cost of power production.

Per SaskPower's annual report, the marginal cost of power generation is $0.11 per kwh,10 thus SaskPower's cost for an average driver's EV is $353.43 - a profit margin of $244.19.  As SaskPower is owned by the provincial government, gain for SaskPower is gain for the provincial government.


Annual costs vs profits for SaskPower per EV ($/year).

Factor in the $150 EV tax and an EV driver is paying about $394 annually to government coffers.

Comparison of Provincial Contribution - Electric vs. Gas

If the average ICE driver purchases 1,360 litres of fuel, with a fuel tax of $0.15/litre,11 they pay around $204 in fuel tax per year. While EV drivers pay less overall to power their vehicles, they pay a greater amount than an ICE driver to the province for the ability to drive their car, as illustrated in the figure below:


Difference in annual fiscal contributions between EV and ICE vehicle owners ($/year)

Conclusion

The EV Tax, presented as a means of making road usage "fair" for all by the government, is a gratuitous tax on EV owners. These drivers are already taxed on their fuel source, and, as of October 1st, are paying twice. Even before you factor in the $150 EV Tax, EV owners are paying more towards provincial coffers than average drivers of gas-powered vehicles pay through the fuel tax.

If the goal is to ensure EV and gasoline vehicles contribute equitably towards the provincial government, then the EV Tax only further imbalances the differences in contribution. By the government's own logic, the EV Tax should be reversed and EV drivers given a credit.

References and Endnotes

1 Saskatchewan Ministry of Finance. (2021). Saskatchewan Provincial Budget 2021-22. https://www.saskatchewan.ca/government/budget-planning-and-reporting/budget-2021-22

2 Solomon, M. (2021, April 9). While Sask. taxes EV owners, some Canadian provinces are offering cash. CTV News. https://regina.ctvnews.ca/while-sask-taxes-ev-owners-some-canadian-provinces-are-offering-cash-1.5380138.

3 Crown Investments Corporation of Saskatchewan. (2020). Home. https://www.cicorp.sk.ca/.

4 SaskPower. (2021). Annual Report. https://www.saskpower.com/-/media/SaskPower/About-Us/Reports/Report-AnnualReport-2020-21.ashx

5 Government of Canada. (2021, March 5). Table RO4: Light Vehicle Statistics by Province/Territory, 2009 [Table]. https://tc.canada.ca/en/corporate-services/policies/road-transportation-0.

6 Note: 8.9 L/100km is the average Canadian vehicle fuel efficiency, per Canada Energy Regulator.
Canada Energy Regulator. (2021, January 29). Market Snapshot: How does Canada rank in terms of vehicle fuel economy? https://www.cer-rec.gc.ca/en/data-analysis/energy-markets/market-snapshots/2019/market-snapshot-how-does-canada-rank-in-terms-vehicle-fuel-economy.html.

7 CAA. (2021). Gas Prices: Regina, Saskatchewan. https://www.caa.ca/gas-prices/

8 Note: This value accounts for reduced efficiency during Saskatchewan winters; the electric vehicle website Virta reports an average energy efficiency of 200wh/km.
Virta. (2021, July 29). EV Charging - How much electricity does an electric car use? https://www.virta.global/blog/ev-charging-101-how-much-electricity-does-an-electric-car-use.

9 SaskPower. (2021). Annual Report: Five Year Revenue Statistics [Table]. https://www.saskpower.com/-/media/SaskPower/About-Us/Reports/Report-AnnualReport-2020-21.ashx

10 Note: This value was determined using values reported in SaskPower’s 2020-21 report.
Total Expenses (page 115): $2,611,000,000 divided by Total Energy Sales (in GWh, page 116): 22,903,000,000.
SaskPower. (2021). Annual Report. https://www.saskpower.com/-/media/SaskPower/About-Us/Reports/Report-AnnualReport-2020-21.ashx

11 Note: The Fuel Tax and Road Use Charge Act imposes a 15 cents/litre tax on gasoline in
Saskatchewan.
Statutes of Saskatchewan. (2021). The Fuel Tax and Road Use Charge Act (Chapter F-23.21). https://publications.saskatchewan.ca/api/v1/products/530/formats/700/download.