BILL ANALYSIS Ó
AB 945
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Date of Hearing: May 27, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
AB
945 (Ting) - As Amended May 20, 2015
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|Policy |Revenue and Taxation |Vote:|9 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill allows, for taxable years beginning on or after
January 1, 2016, and before January 1, 2021, a partial sales and
use tax exemption, from state sales and use tax only, for the
purchase or use of a low emission motor vehicle that qualifies
for the federal Qualified Plug-in Electric Drive Motor Vehicle
tax credit or a state incentive under the Clean Vehicle Rebate
Project, the California Hybrid and Zero-Emission Truck and Bus
Voucher Initiative Project, or the On-Road Heavy-Duty Voucher
Incentive Program. The bill specifies the exemption amount
shall be based on the greater of the trade-in value of a motor
vehicle traded in for the low emission vehicle, or the sum of
the tax credits and rebates for which the low emission vehicle
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is eligible.
FISCAL EFFECT:
1)Potentially significant GF costs to the Board of Equalization
to administer the changes to procedures and systems.
2)Estimated annual GF revenue decrease of $16.8 million.
COMMENTS:
1)Purpose. According to the author, this bill will help the
state reach its greenhouse gas reduction goals by further
incentivizing clean vehicles with a state sales tax exemption.
The author argues California's transportation sector
constitutes the greatest source of air pollution, accounting
for 40% of the state's greenhouse gas emissions, and that
electric vehicles emit only a quarter of the air pollutants of
an average new car. The author believes consumers need
greater incentives to buy cars with cleaner emissions
technology because these vehicles are often more expensive
than traditional internal combustion vehicles, and therefore
attract higher sales taxes.
Supporters argue the higher costs for low emissions vehicles
results, at least in part, from their advanced technologies
and relatively low production volumes. Production of those
vehicles has not yet achieved the economies of scale relative
to conventional vehicles, and applying sales taxes based on
purchase price further suppresses efforts to increase that
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production. Proponents argue reducing sales tax also
harmonizes state tax policy with the other incentives offered
to consumers, providing benefits to all Californians by
creating clean energy jobs, incentivizing further
technological development, and reducing overall use of fossil
fuels.
2)But Who Will Pay For Our Roads? Opponents, led by the
California Tax Reform Association, argue there are already
several federal and state incentives, which together can total
several thousands of dollars, for buying low-emission
vehicles. In addition, those vehicles pay substantially less
highway tax because those taxes are tied to the use of fuel.
As a result, purchasers of low-emission vehicles already
receive substantial purchase incentives as well as operating
cost and operating tax savings over conventional vehicles.
Furthermore, opponents argue federal fuel standards will soon
result in many more low-emission vehicle options, which could
result in many more vehicles being purchased without paying
state sales tax under this bill. Yet all vehicles, including
electric vehicles with their heavy batteries, wear and tear on
California roads. Reforming vehicle fuel and vehicle mileage
taxes may be beyond the scope of this bill, but its need will
become even more urgent with further reductions in tax
revenues derived from vehicle purchases and use.
Lastly, because electric and plug-in hybrid vehicles tend to
be more expensive than conventional vehicles, the benefits of
a sales tax exemption will largely be enjoyed by those of
greater means. Even the cheapest low-emission vehicles are
still beyond the reach of lower-income persons. The committee
may wish to consider whether an additional sales tax incentive
is necessary or appropriate to achieve the state's policy aims
for encouraging low-emission vehicle purchases.
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Analysis Prepared by:Joel Tashjian / APPR. / (916)
319-2081