California Bill Proposes More-Than Halving Sales Tax on Green Cars

In a renewed effort to slash California green car sales tax and spur more purchases, Assemblyman Phil Ting (D-San Francisco) is sponsoring a bill to reduce present taxation of 7.5 percent to 3.06 percent from 2016-2020.

Types of new vehicle purchases that could take advantage of the legislation – if it passes several committees prior to an Assembly vote later this year – include all-electric cars, hydrogen fuel cell vehicles, plug-in hybrids, and natural gas vehicles.

Ting’s bill, according to the Los Angeles Times is the second attempt to do something along these lines. In 2013 a bill stalled due to funding concerns, it reports, but Ting now says funding may not be an issue, suggesting better chances for this to pass.

If the bill became law, proponents are looking at a $92 million annual loss in revenues to California, but these are anticipated to be offset by California’s cap-in-trade fund. This program now has $969 million as of Feb. 18 according to the California Air Resources Board, the Times reports.

Quarterly auctions for carbon emissions credits has seen credit purchases by corporations and municipalities nearly double since the program was expanded this year.

Among several automakers cited by the Times in favor of the bill that would further reduce net cost of alternative energy products are Chevrolet and Nissan.

The estimate of $92 million cost in lost revenues to California to let car buyers save on sales tax is based on an average sales price of $34,725 per vehicle and estimated 60,000 plug-in hybrids and EVs sold last year.

Although green car sales could expand and even balloon substantially in the proposed 2016-2020 period, nothing was said how that could affect the balance of income from cap-and-trade income versus lost revenues.

One side effect according to Edmunds.com’s Senior Writer John O’Dell is that more clean used green cars could find their way to the market, and at this point, the program is still skewed to those “who probably are less in need of a reward.”

LA Times