California Aims to Slash Sales Tax on EVs
Environmentally conscious California is considering a bill that would dramatically cut the sales tax on new green cars. According to Green Car Reports, the proposed law 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. If passed, the sales tax reduction would be an absolute shot-in-the-arm for the burgeoning EV industry – and not to mention the consumers that will keep more money in their pockets.
The measure being debated in Sacramento comes as no surprise, as California leads the nation in pro-plug-in legislation. In fact, the legislature tried to pass a similar version of this bill in 2013, but it lost momentum due to concerns over funding. This time the measure stands a better chance of passing thanks to the state’s improved fiscal outlook, and Gov. Jerry Brown’s strident stance on reducing California’s carbon footprint.
The main obstacle – as is the case for any tax break – is finding a way to make up the lost revenue. The Los Angeles Times estimates that $96 million per year would be lost between 2016 and 2020 – the period for tax cuts specified in the bill. The Times calculated that number by using the total number of plug-in sales in California (60,000) for 2014, and baselining that with the national average transaction price of $34,700. Plug-in sales, particularly in California, are growing year-over-year, so it’s possible that substantial increases in the sales volume would help ameliorate the tax situation.
Notable EV-friendly actions by Gov. Brown of California:
- 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.