BILL ANALYSIS �
AB 1077
Page 1
Date of Hearing: July 3, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1077 (Muratsuchi) - As Amended: June 15, 2013
Policy Committee: Revenue and
Taxation Vote: 9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill provides a partial exemption from sales and use taxes
and the vehicle license fee (VLF) imposed on an owner of a
qualified motor vehicle (QMV), as defined. Specifically, this
bill:
1)Exempts from the determination of QMV market value used for
computing the VLF, the amounts allowed as a tax credit under
federal law and any state incentive amount that is received
from specified programs.
2)Provides a partial sales and use tax exemption for the
purchase or use of a QMV. The amount of the exemption would
be the amounts allowed as a tax credit under federal law and
any state incentive amount that is received from specified
programs.
3)Provides that, notwithstanding any provision of the
Bradley-Burns Uniform Local SUT Law or the Transactions and
Use Tax Law, the exclusion shall not apply with respect to any
tax levied by a county, city or district pursuant to those
laws.
FISCAL EFFECT
According to estimates from the Board of Equalization, there
will be reduced sales and tax collections of approximately $5
million (General Fund). In addition, there will be reduced VLF
AB 1077
Page 2
revenues of approximately $500,000. Almost all of the VLF
revenues are allocated to local governments.
COMMENTS
1)Purpose . According to the author, alternative fuel vehicles
provide benefits to California citizens that are external to
the cost to the purchaser. These benefits include increasing
our national independence from foreign energy sources;
providing more economical and sustainable transportation
choices for consumers and businesses, thus reducing our
economic vulnerability to sudden fuel price increases caused
by external events; reducing air pollutants, climate change
pollutants and toxic emissions from mobile sources; reducing
future pressures for additional environmental controls on
existing and new businesses and industries in California; and
creating new advanced transportation technology jobs and
industries in California. The author argues these benefits
should be reflected in state tax policy and fees.
2)Support . The sponsor, the California Electric Transportation
Coalition states this bill seeks to reduce the upfront costs
of purchasing alternative-fuel vehicles by aligning the state
portion of the sales tax and the vehicle license fee with
conventionally-fueled vehicles. They note that taxes are
higher on alternative-fuel vehicles because their purchase
price is higher. Because of this, they argue, the current
system unfairly penalizes the alternative-fuel vehicles the
state encourages through a number of monetary and non-monetary
incentives.
3)Background . A QMV is defined as a vehicle that is eligible
for existing state programs or the federal electric car tax
credit. Existing state law provides several incentives for
purchasing alternative-fueled vehicles.
a) Rebates of up to $2,500 for the purchase of
zero-emission and plug-in hybrid electric vehicles under
the Clean Vehicle Rebate Project. The rebates are
available for light-duty cars and trucks, low-speed
neighborhood electric cars, and zero-emission motorcycles.
AB 1077
Page 3
b) Vouchers from $8,000 to $45,000, on a first-come,
first-served basis, to offset approximately half of the
additional cost of eligible new hybrid and electric trucks
and buses under the California HVIP.
c) Vouchers from $10,000 to $45,000 for 10 or fewer vehicle
fleets to quickly replace or retrofit older heavy-duty
diesel vehicles under the Carl Moyer Program - VIP.
Federal law provides an income tax credit of up to $7,500 for
purchases of electric and plug-in hybrid electric vehicles,
which include passenger vehicles and light trucks. The credit
amount varies based on the capacity of the battery used to
fuel the vehicle. Small neighborhood electric vehicles do not
qualify.
4)Constitutional protection for VLF . The California
Constitution requires that VLF revenue be allocated to cities
and counties. The state may use funds for administrative
costs. The Legislature is required to provide replacement
revenues to local governments if it reduces the VLF rate.
This bill reduces the VLF base but does not change the rate.
Although such a change is not specifically prohibited, it is
unclear if the Legislature can reduce the base without
providing replacement revenues.
5)Relevant legislation .
a) AB 220 (Ting) exempts from the state sales and use tax
super ultra-low emission vehicles and advanced technology
partial zero emission vehicles. This bill is in the
Assembly Revenue and Taxation Committee.
b) SB 221 (Pavley), exempts from the state sales and use
any amount allowed as a federal tax credit, and any amount
received, awarded, or allowed under a state incentive
program. SB 221 is in the Senate Governance and Finance
Committee.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081
AB 1077
Page 4