Amended in Assembly June 6, 2013

Amended in Assembly April 2, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1077

Introduced by Assembly begin delete Member end delete begin insert Members end insert Muratsuchi begin insert and Ting end insert

(Coauthors: Assembly Members Stone and Williams)

February 22, 2013

An act to add and repeal Sections begin delete 6011.3, 6012.4, end delete begin insert 6378.5 end insert and 10759.5 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 1077, as amended, Muratsuchi. Sales and use taxes: vehicle license fee: exclusion: alternative fuel motor vehicles.

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Existing laws impose

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begin insert The Sales and Use Tax Law imposes end insert state sales and use taxes on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state, measured by the sales price. begin delete The Sales and Use Tax Law defines the terms “gross receipts” and “sales price.” end delete begin insert Existing law also provides for specific exemptions from these taxes. end insert

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This bill would, on and after January 1, 2014, and before January 1, 2022, exclude from the terms “gross receipts” and “sales price,” in the sale of a new alternative fuel motor vehicle, any amount allowed as a credit under a specified provision of the Internal Revenue Code, relating to new qualified plug-in electric drive motor vehicles, and any amounts received, awarded, or allowed pursuant to a state incentive program for the purchase or lease of an alternative fuel vehicle.

end delete begin insert

This bill would, on and after January 1, 2014, and before January 1, 2022, exempt from the taxes imposed by the Sales and Use Tax Law that portion of the gross receipts from the sale of, and the storage, use, or other consumption of, a qualified motor vehicle, as defined, that is the greater of (1) the sum of the amount of any credit under a specified provision of the Internal Revenue Code relating to new qualified plug-in electric drive motor vehicles, and any amount received, awarded, or allowed pursuant to a state incentive program for the purchase or lease of an alternative fuel vehicle; or (2) the value of a motor vehicle that is traded in for the motor vehicle that qualifies for a credit or incentive amount under those programs, where the value of the trade-in motor vehicle is separately stated on the new motor vehicle invoice or bill of sale or similar document provided to the purchaser.

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The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing law authorizes districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which conforms to the Sales and Use Tax Law. Exemptions from state sales and use taxes are incorporated into these laws.

This bill would specify that this exclusion does not apply to local sales and use taxes and transactions and use taxes begin insert , or to certain state sales and use tax rates end insert .

The Vehicle License Fee Law provides that the annual amount of the license fee for any vehicle is 0.65% of the market value of the vehicle, as specified. That law provides for the determination of the market value of any vehicle, for reclassification to increase the market value of a vehicle, and for the exemption of certain vehicles from the imposition of the license fee.

This bill would, on and after January 1, 2014, and before January 1, 2022, for purposes of determining the vehicle license fee, exempt from the determination of market value of a new motor vehicle propelled by alternative fuels any amount allowed as a credit under a specified provision of the Internal Revenue Code, relating to new qualified plug-in electric drive motor vehicles, and any amounts received, awarded, or allowed pursuant to a state incentive program for the purchase or lease of an alternative fuel vehicle.

This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert Section 6378.5 is added to the end insert begin insert Revenue and
Taxation Code end insert begin insert , to read: end insert

begin insert

begin insert 6378.5. end insert   

(a) There are exempted from the taxes imposed by this
part that portion of the gross receipts, from the sale of, and the
storage, use, or other consumption in this state of, a qualified
motor vehicle, that is equal to the greater of the following:

(1) The sum of both of the following:

(A) The amount of any new Qualified Plug-in Electric Drive
Motor Vehicle credit received with respect to the qualified motor
vehicle under Section 30D of the Internal Revenue Code.

(B) The amount of any state incentive amount received, awarded,
or allowed with respect to the qualified motor vehicle under the
Clean Vehicle Rebate Project, the California Hybrid and
Zero-Emission Truck and Bus Voucher Incentive Project, or the
On-Road Heavy-Duty Voucher Incentive Program within the Carl
Moyer Program.

(2) The trade-in value of a motor vehicle that is traded in for
the qualified motor vehicle where the value of the trade-in motor
vehicle is separately stated on the new motor vehicle invoice or
bill of sale or similar document provided to the purchaser.

(b) For purposes of this section, “qualified motor vehicle”
means a motor vehicle that receives, or is awarded or allowed,
either or both of the following:

(1) A credit for a Qualified Plug-in Electric Drive Motor Vehicle
under Section 30D of the Internal Revenue Code.

(2) A state incentive amount under the Clean Vehicle Rebate
Project, the California Hybrid and Zero-Emission Truck and Bus
Voucher Incentive Project, or the On-Road Heavy-Duty Voucher
Incentive Program within the Carl Moyer Program.

(c) (1) Notwithstanding any provision of the Bradley-Burns
Uniform Local Sales and Use Tax Law (Part 1.5 (commencing
with Section 7200)) or the Transactions and Use Tax Law (Part
1.6 (commencing with Section 7251)), the exemption established
by this section shall not apply with respect to any tax levied by a
county, city, or district pursuant to, or in accordance with, either
of those laws.

(2) The exemption established by this section shall not apply
with respect to any tax levied pursuant to Section 6051.2 or 6201.2,
pursuant to Section 35 of Article XIII of the California Constitution.

(d) This section shall become operative on January 1, 2014,
and shall remain in effect only until January 1, 2022.

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SECTION 1.  

Legislature finds and declares:

(a) There is a wide disparity in fees levied on owners of light-,
medium-, and heavy-duty vehicles operated on alternative fuels
when compared to those same taxes and fees levied on owners of
comparable gasoline and diesel fuel vehicles.

(b) In some cases, the fees on alternative fuel vehicles are more
than twice as much as those for conventional fuel vehicles.

(c) The disparity in fees exists even though the alternative fuel
vehicle may look identical to the conventional fuel vehicle and
provide the same or lesser utility to the individual owner.

(d) The existing California vehicle license fee on motor vehicles
that operate on alternative fuels is higher than for comparable
conventional fuel vehicles because alternative fuel vehicles
generally have higher sales prices. The higher sales prices are
largely due to the fact that these vehicles are produced in extremely
low volumes (many assembled by hand), such that their production
has not achieved the economies of scale that would significantly
reduce their cost; and they use many new advanced materials and
technologies that also have not yet achieved economies of scale,
and therefore have a temporarily greater cost to consumers.

(e) The higher sales prices for these alternative fuel vehicles
are expected to be a short-term, temporary situation because prices
are expected to decline significantly to competitive levels as
volume increases. If this does not occur, these vehicles may never
be competitive, and automakers would likely withdraw them from
the market. The current vehicle license fee does not reflect these
temporary, short-term pricing situations. Instead it intrinsically,
but incorrectly, assumes that these short-term higher prices reflect
true long-term market value of the vehicles.

(f) Alternative fuel vehicles provide benefits to California
citizens that are external to, or not reflected in, their cost to the
purchaser. These benefits include: increasing our national
independence from foreign energy sources; providing more
transportation choices for consumers and businesses, thus reducing
our economic vulnerability to sudden fuel price increases caused
by external or internal events; reducing air pollutants, climate
change pollutants, and toxic emissions from mobile sources; and
reducing future pressures for additional environmental controls
on existing and new businesses and industries in California.

(g) It is the public policy of the State of California, the federal
government, and many local governments, to encourage the
development and use of alternative fuel vehicles, for the purpose
of providing the benefits described above to all California citizens.

(h) Existing vehicle license fee calculations, as they relate to
the determination of market value of alternative fuel vehicles, do
not reflect the critical short-term pricing issues described above,
nor the external benefits that accrue to all California citizens.
Additionally, these existing fees act as a significant disincentive
to potential purchasers of alternative fuel vehicles, and as such,
are contrary to existing public policies at all levels of government.

(i) It is the intent of the Legislature to equalize the vehicle
license fee between alternative fuel vehicles and conventional fuel
vehicles for a period of eight years, beginning January 1, 2014,
and ending December 31, 2021.

SEC. 2.  

Section 6011.3 is added to the Revenue and Taxation
Code, to read:

6011.3.  

(a) Notwithstanding Section 6011 or any other law,
on and after January 1, 2014, and before January 1, 2022, “sales
price” from the purchase of a new alternative fuel motor vehicle
shall not include any amount allowed as a credit under Section
30D of the Internal Revenue Code, relating to new qualified plug-in
electric drive motor vehicles, and any amounts received, awarded,
or allowed pursuant to a state incentive program for the purchase
or lease of an alternative fuel vehicle, including, but not limited
to, state income tax credits, the Clean Vehicle Rebate Project, the
California Hybrid and Zero-Emission Truck and Bus Voucher
Incentive Project, and the On-Road Heavy-Duty Voucher Incentive
Program under the Carl Moyer Program.

(b) For purposes of this section, all of the following shall apply:

(1) “Alternative fuel vehicle” means a motor vehicle subject to
registration under the Vehicle Code that operates some or all of
the time on a fuel other than gasoline or diesel.

(2) “Motor vehicle” means “motor vehicle” as defined by
Section 415 of the Vehicle Code.

(c) The cost of the vehicle after deducting the amounts described
in subdivision (a) shall be stated in the contract for sale or lease
with the purchaser, and shall be reported to the board quarterly.

(d) Notwithstanding any provision of the Bradley-Burns
Uniform Local Sales and Use Tax Law (Part 1.5 (commencing
with Section 7200)) or the Transactions and Use Tax Law (Part
1.6 (commencing with Section 7251)), the exclusion established
by this section shall not apply with respect to any tax levied by a
county, city, or district pursuant to, or in accordance with, either
of those laws.

(e) This section shall be repealed on January 1, 2022.

SEC. 3.  

Section 6012.4 is added to the Revenue and Taxation
Code, to read:

6012.4.  

(a) Notwithstanding Section 6012 or any other law,
on and after January 1, 2014, and before January 1, 2022, “gross
receipts” from the sale of a new alternative fuel motor vehicle shall
not include any amount allowed as a credit under Section 30D of
the Internal Revenue Code, relating to new qualified plug-in
electric drive motor vehicles, and any amounts received, awarded,
or allowed pursuant to a state incentive program for the purchase
or lease of an alternative fuel vehicle, including, but not limited
to, state income tax credits, the Clean Vehicle Rebate Project, the
California Hybrid and Zero-Emission Truck and Bus Voucher
Incentive Project, and the On-Road Heavy-Duty Voucher Incentive
Program under the Carl Moyer Program.

(b) For purposes of this section, all of the following shall apply:

(1) “Alternative fuel vehicle” means a motor vehicle subject to
registration under the Vehicle Code that operates some or all of
the time on a fuel other than gasoline or diesel.

(2) “Motor vehicle” means “motor vehicle” as defined by
Section 415 of the Vehicle Code.

(c) The cost of the vehicle after deducting the amounts described
in subdivision (a) shall be stated in the contract for sale or lease
with the purchaser, and shall be reported to the board quarterly.

(d) Notwithstanding any provision of the Bradley-Burns
Uniform Local Sales and Use Tax Law (Part 1.5 (commencing
with Section 7200)) or the Transactions and Use Tax Law (Part
1.6 (commencing with Section 7251)), the exclusion established
by this section shall not apply with respect to any tax levied by a
county, city, or district pursuant to, or in accordance with, either
of those laws.

(e) This section shall be repealed on January 1, 2022.

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begin delete SEC. 4. end delete
begin insert SEC. 2. end insert   

Section 10759.5 is added to the Revenue and Taxation
Code, to read:

10759.5.  

(a) For purposes of determining the vehicle license
fee imposed by this part, there are exempted from the determination
of market value of a new motor vehicle propelled by alternative
fuels begin delete , any end delete begin insert the sum of the end insert amount allowed as a credit under Section
30D of the Internal Revenue Code, relating to new qualified plug-in
electric drive motor vehicles, and any begin delete amounts end delete begin insert state incentive
amount end insert received, awarded, or allowed begin delete pursuant to a state incentive
program for the purchase or lease of an alternative fuel vehicle,
including, but not limited to, state income tax credits, end delete begin insert under end insert the
Clean Vehicle Rebate Project, the California Hybrid and
Zero-Emission Truck and Bus Voucher Incentive Project, begin delete and end delete begin insert or end insert
the On-Road Heavy-Duty Voucher Incentive Program begin delete under end delete begin insert within end insert
the Carl Moyer Program. begin delete This exemption shall apply to the
subsequent payments of the vehicle license fee. end delete

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(b) For purposes of this section, “motor vehicle propelled by
alternative fuels” means a motor vehicle that operates some or all
of the time on a fuel other than gasoline or diesel.

end delete begin delete

(c)

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begin insert (b) end insert  This section shall become operative on January 1, 2014, and
shall remain in effect only until January 1, 2022, and as of that
date is repealed.

begin delete SEC. 5. end delete
begin insert SEC. 3. end insert   

This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.