California Bill Would Slash Sales Tax On Greenest New Vehicles


Chevrolet Spark EV at CCS fast charging station in San Diego.

Chevrolet Spark EV at CCS fast charging station in San Diego.

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The California Legislature is considering a bill that would cut the sales tax on green cars in the state by more than half.

It calls for reducing the sales tax on battery-electric cars, plug-in hybrids, and hydrogen fuel-cell vehicles to 3.06 percent, compared to the current 7.5 percent.

ALSO SEE: Six California Electric-Car Bills Signed By Governor Brown

A similar version of this bill was first introduced in 2013, but stalled because of concerns over funding, the Los Angeles Times reports.

The bill's author, Democratic Assemblyman Phil Ting, believes California's improved financial situation and Governor Jerry Brown's repeated call for further decreases in greenhouse-gas emissions make success more likely on the second try.

He said funds collected under California's cap-and-trade program could make up for the revenue shortfall that would result from the proposed tax cuts.

First 2015 Hyundai Tucson Fuel Cell delivered to lessee at Tustin Hyundai, June 2014

First 2015 Hyundai Tucson Fuel Cell delivered to lessee at Tustin Hyundai, June 2014

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Those funds weren't available in 2013, and totaled $969 million as of February 18.

Much of that sum has already been allocated in the 2014-2015 state budget, though.

The money comes from quarterly auctions of carbon-emissions credits, which are sold to corporations and municipalities responsible for emissions. The program was broadened for 2015 to include companies making transportation fuels.

CHECK OUT: Hydrogen Fuel Now Available For Sale In California

There would have to be enough to cover around $92 million per year in lost tax revenue between 2016 and 2020--the period for tax cuts specified in the bill.

The Los Angeles Times based that figure on total plug-in electric car sales in California for 2014--around 60,000 units--and a national average transaction price of $34,725 per vehicle.

However, electric car sales have increased steadily from year to year, so if that trend continues, sales volumes will be higher every year the tax cut is in effect.

2015 Fiat 500e

2015 Fiat 500e

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Going forward, there will also be a handful of hydrogen fuel-cell cars sold in California each year.

If passed, the bill could help California meet its ambitious emission-reduction goals.

MORE: California Goal: Cut Petroleum Use For Cars In Half By 2030

Gov. Brown signed an executive order in 2012 calling for 1.5 million zero-emission vehicles on California roads by 2025.

In his inaugural address last month, he proposed cutting petroleum use in cars and trucks by 50 percent between now and 2030.

[Hat tip: Shad Balch]

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