The California legislature may do what the feds have been unable to do – create a permanent tax credit for buyers of super efficient vehicles, including electric, hybrid, plug-in hybrid-electric, and natural gas.

The lunacy of federal tax credits is that the $7,500 credit disappears once a manufacturer has sold 200,000 eligible plug-in electric vehicles. Years ago, for hybrids, it was only 60,000 and that's why there is no more federal money for buying a Toyoa Prius or Ford Fusion or Escape hybrids, but there are credits on the recently-introduced Prius plug-in and Ford C Max Energi.

The California bill (Assembly Bill 1077), by Assemblyman Al Muratuschi of Hermosa Beach, would use existing incentives to lower the cost of all alternative fuel vehicle purchases by reducing state sales taxes. The bill would reduce the sales tax due on an alt-fuel vehicle to what would be required of a "comparable conventional fuel vehicle, as determined by the State Energy Resources Conservation and Development Commission." The bill is supported by EV advocates, including California utilities, automakers like (surprise) Nissan and General Motors and environmental groups.


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  • 20 Comments
      BipDBo
      • 1 Year Ago
      Good deal for potential EV customers, except possibly for buyers of a Tesla S. In this case they might get taxed more.
        paulwesterberg
        • 1 Year Ago
        @BipDBo
        Comparable luxury sedan with similar performance? Mercedes E550 starts at $61.4k... The Model S starts at 63.4k(after tax credit).
          raktmn
          • 1 Year Ago
          @paulwesterberg
          That's what I was thinking. Tesla Model S Performance is way cheaper than a comparable Porsche Panamera. Hopefully they don't increase the registration taxes that Tesla Model S Performance owners have to pay! =)
      S
      • 1 Year Ago
      You want it you pay for it! I am already tapped out paying for Obama Phones!
        Chris M
        • 1 Year Ago
        @S
        Obama phone? Oh, you're referring to the program to provide affordable basic phone service to low income people, started during the Reagan administration. The Obama administration added basic cell phones to that program - because they had become cheaper than land line phones! Imagine that, an administration looking for a more economical way of doing things! Also, this proposal is to reduce the sales taxes on plug-ins. I thought conservatives were all for reducing taxes.
      Spec
      • 1 Year Ago
      The bill seems like a good idea. I guess what they are saying is tax a $28.8K Leaf like $15 ICE. Sounds like a good idea.
      Actionable Mango
      • 1 Year Ago
      Why is it "lunacy" to have an expiration on credits? The whole point is to help out a new segment and soften the blow to early adopters. The Prius sells just fine now without any credit.
        raktmn
        • 1 Year Ago
        @Actionable Mango
        I agree, the incentives need to be phased out. I think the point of this bill is to base when the incentives are phased out based upon the actual price delta between an EV and a comparable gas car. Then as EV prices come down, this tax incentive will automatically shrink and naturally go away. The benefit of a system like that is that the expiration isn't arbitrary and tied to a specific number. Having the expiration tied to a specific number, when it really needs to be 100,000 units higher or 100,000 units lower presents it's own problems and risks.
          karlInSanDiego
          • 1 Year Ago
          @raktmn
          Good point, raktmn; however, in a capitalist market, you don't price your goods based on cost, you do it based on sales opportunity (and in theory competition stops the gougers). So what we've seen so far is that car companies have built the rebate into the sales price straight away, using it in their ads, on their website and in press releases. It's their way of saying, nice rebate, we'll take that, thank you. They've set the price higher knowing the tax credit is there for you, and in the meantime they want as high a sales price as they can get (and at this point, it's still a loss for most.). So the danger I see in letting this become some differential test, is it encourages higher pricing of EV's for both the maker, and the consumer (if that increased price is going to be govt. credit anyway). This won't help BEV prices come down.
        Spec
        • 1 Year Ago
        @Actionable Mango
        They can't last at this rate forever. But that said . . 1) We might want to extend the program further if needed. 2) An end should be a gradual phase-out instead of a cliff. 3) Having a small but permanent tax-incentive would be OK due to the fact that EVs reduce the trade deficit, reduce CO2 emissions, reduce pollution, create demand for domestic electricity, reduce oil entanglements, etc. (Try to catch some of the 'externalities' of gasoline.)
      raktmn
      • 1 Year Ago
      Heck, I'd just be happy if they wouldn't apply sales tax to the $7,500 federal tax incentive for cars, and 10% tax incentive for EV motorcycles. Also no sales tax on State rebates. Right now, I pay sales tax on both the federal and state rebates, and then next year I pay federal income tax on the full amount of the state rebate. I'm basically being triple-taxed on the same money. It would all be much cleaner and simpler if the Federal and State tax incentives were changed to point-of-purchase price reductions.
        EZEE
        • 1 Year Ago
        @raktmn
        Paying taxes on tax breaks given by the government.....sigh...
          throwback
          • 1 Year Ago
          @EZEE
          I guess you and I are the only ones who see the irony in this.
      Carguy
      • 1 Year Ago
      People want to always compare the Volt to a Cruze and a Leaf to a Versa. While I don't think those are fair comparisons for these purposes the sales tax difference in a Volt in LA County might add up to almost $2100 tax savings (if using a Cruze) on the purchase of a new Volt. Ultimately if CA and the various localities are really serious about making a push for EV's they should temporarily suspend all sales taxes of EV's which would give people an average of %9 discount on their cars in the state.
      Levine Levine
      • 1 Year Ago
      chump change. The reduced sales tax is peanuts compared to the $7500 fed rebate. Just another politician wanting to be re-elected by fooling the voters.
        Dave R
        • 1 Year Ago
        @Levine Levine
        Chump change, really? The reduction in taxes thanks to this bill would reduce the cost of the vehicle almost $1,000 at purchase time thanks to the reduction in sales tax and vehicle license fee, and the annual vehicle license fee will continue to be lower as well. That's quite a substantial savings. Now compare that to the additional vehicle license fee that other states (I'm looking at you Michigan and Washington) are penalizing EVs with.
          Spec
          • 1 Year Ago
          @Dave R
          aatheus, I agree. As an EV driver, I should contribute to road maintenance. For now, a flat $100 annual fee seems like a good way of doing it but eventually some type of mileage-based system might be good. A self-reported odometer reading should be fine since you also need to report that to insurance companies and when you sell the vehicle. (If you've been lying, they can nail you when you sell the vehicle.)
          aatheus
          • 1 Year Ago
          @Dave R
          While I'm in favor of paying less tax in general, I am also in favor of driving on roads that are painted and repaved regularly. We already have terribly undermaintained streets and highways in a lot of CA. I hope CA goes the way of Washington and adds a small % to the vehicle registration that can ONLY be used for road improvements. Since I'm not paying for the roads via gas tax and all.
      EZEE
      • 1 Year Ago
      Does the headline and the actual story make sense? The headline makes it sound like a tax on EV's, while the story talks about a permanent tax credit.
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