By on March 10, 2015

Tesla Roadster with California Vanity Plate

Live in California and looking for more money in your wallet upon purchasing a green vehicle? The state’s legislature just might make that wish come true.

The Los Angeles Times reports a bill sponsored by Assemblyman Phil Ting of San Francisco would reduce the sales tax on so-called clean vehicles from 7.5 percent to 3.06 percent. The reduction would be applied to EVs, PHEVs, FCVs and CNG-powered models.

Should the legislation become law, over $92 million in tax revenue would disappear between 2016 and 2020, when the law rides off into the sunset; the figure is based on 60,000 PHEVs and EVs sold in 2014 for the national average transaction price of $34,725 per vehicle. Said revenue could be regained through California’s cap-and-trade carbon emissions credits program, currently holding $969 million as of February 18 per the California Air Resources Board.

The bill, which failed in 2013 due to funding concerns amid a shaky economic environment, will go through the committee process before arriving on the Assembly floor for voting later this year.

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20 Comments on “California Legislature Considering Sales Tax Reduction For Clean Vehicles...”

  • avatar

    This makes me wonder, what was the build quality like on early Tesla models like the one pictured? They have a pretty “kit car” appearance, and in the one shown the bumper is more loose on the right than on the left (panel gap).

    And what does it say in script at the back, it looks like “Panther Sport?” But I bet that’s not right.

  • avatar

    There’s absolutely no rhyme or reason to gas guzzler taxes or tax incentives beyond PUNISHING people – who are supposed to be free – for buying COOL CARS – while subsidizing the richest for buying “green” cars…and giving them pristine “green parking spots” on liberal college campuses.

    I’m just fortunate I beat the gas tax on both my cars.

    • 0 avatar

      It is fine to tax people who want large engines, like Hellcat fanboys, just as it is fine to tax more those with larger houses.

      • 0 avatar

        Taxes are supposed to be just enough to run the government. Why is it fine for politicians to reward or punish taxpayers for their choices? I can see a property tax based on value, and in Cali Prop. 13 protects those of modest means, but who cares if I want a bigger engine or more power? I’ll pay more at the pump for it anyway, so it’s none of the government’s business.

        • 0 avatar

          “Taxes are supposed to be just enough to run the government.” Except when it’s used to extract behavior from it’s citizens, like, having kids, building houses, being green or giving money to politicians.

        • 0 avatar

          Lorenzo: “I can see a property tax based on value, and in Cali Prop. 13 protects those of modest means”

          Sorry to stir the hornet’s nest but California taxes are more messed up than the federal ones…

          Prop 13 did roll back the tax percentage to 1% of the property “value” for all people. That might be good (or not). The lower taxes paid by all homeowners and businesses probably resulted in California having just about the highest sales tax (9%+ for state+local) and state income tax (9%+ starting at $51k income) and one of the higher corporate income taxes (8.5% ?). Renters theoretically get some benefit from that part of the rollback, since property tax on apartments would be rolled back as well.

          But that’s actually quite minor compared to the _other_ (and much more controversial) part of Prop 13, which limits the “value” assessment increases from year-to-year. These assessments accumulate over time. For example, my ancient neighbors are taxed on an assessed value of about $100k so they pay about $1k/year taxes; the fair market value is about $1.5 million, so without this other Prop 13 perk they would pay $15k/year.

          Without the “value” limit my neighbors would face a $15k/year tax burden. However, they would face that burden precisely because they made a gigantic windfall in increased property value. $27k (actual purchase price in 1961) is about $200k today using federal CPI, so they really did make a $1.3 million gain. They might have squandered that windfall or spent it on some noble cause, but to call them people of “modest means” is preposterous.

          There are myriad other distortions as well. Corporations get the benefits and use it to ward off competition. Homeowners hold on to houses even if they don’t live in them and have no intention of ever living in them. The rent -vs- own situation is distorted here partially because of Prop 13.

          I’ll leave you with this: When children inherit a house, they _also_ inherit the Prop 13 perks! Talk about a policy for the benefit of the 1%!

          • 0 avatar

            Sunnyvale, there are all kinds of plusses and minuses to Prop 13. The best I can say about it is what
            SCOTUS Justice Scalia actually said about it during arguments when it came before the court: ” It’s rough and ready, not perfect but close enough for government work.”

    • 0 avatar

      “no rhyme or reason to gas guzzler taxes”

      It’s supposed to punish people who buy 20 MPG cars so that they instead buy 15 MPG “light” trucks to avoid the gas guzzler tax.

  • avatar

    “while subsidizing the richest for buying “green” cars”

    One reason is that the rich can better afford to be early adopters. Early adopters provide the incentive, revenue, and feedback loops for manufacturers to improve products and increase production volumes to bring costs down for others.

    The tough spot is finding the sweet spot where it is both politically palatable and can actually make a difference.

  • avatar

    A solution in search of a problem. People are snapping up hybrids and electric vehicles in CA rapidly.

    This won’t do anything but create yet another budget hole. Want to help Assemblyman Ting? Work on making it easier to run a small business in the Golden State. You know, the guys that help create jobs.

  • avatar

    I wasn’t aware that Cali had solved their absolutely MASSIVE budget problems so well that they could afford to incentive-ize cars that are typically bought by wealthy individuals in the first place.


    • 0 avatar

      Where have you been? The “massive” budget deficit has been vanquished by several hefty “temporary” taxes that are likely to become permanent once spending ratchets up and the revenue drops off in the next downturn. Then there will be another massive budget deficit.

      • 0 avatar

        Does anyone know if any of the temporary taxes ever went away?

        The telephone tax was supposed to be temporary, but people who still use a landline are still paying it today. One reason I haven’t had a landline since cellphones were invented.

        And then there was the tax to pay for WWI.

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