BILL ANALYSIS Ó
AB 2675
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Date of Hearing: May 18, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
2675 (Chiu) - As Amended May 2, 2016
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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 provides a partial Sales and Use Tax (SUT) exclusion
and a tax credit under the Personal Income Tax (PIT) Law and the
Corporation Tax (CT) Law for the purchase of electrical vehicle
infrastructure for a qualified dwelling. Specifically, this
bill:
1)Excludes 10% of the first $400,000 of gross receipts of
purchased electric vehicle infrastructure from the state
portion of the sales and use tax. This partial exclusion is
operative between January 1, 2017, and January 1, 2020.
AB 2675
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2)Creates a PIT and CT credit equal to 10% of the amount paid by
a taxpayer for electric vehicle infrastructure, not to exceed
$2,500. This credit is operative for taxable years beginning
on or after January 1, 2017, and before January 1, 2020.
3)Defines a "qualified dwelling" as a multifamily residence or
multifamily unit, mobile home, or manufactured home located at
a mobile home park, duplex, townhome, apartment, and
condominium.
FISCAL EFFECT:
1)Significant administrative costs to the Board of Equalization
(BOE) and the Franchise Tax Board (FTB) to implement these
programs.
2)Annual GF revenue loss of approximately $1.7 million, $2.6
million, $2.8 million in FY 2016-17, FY 2017-18, FY 2018-19,
respectively.
COMMENTS:
1)Purpose. According to the author, AB 2675 will help promote
zero-emission vehicles and help invest in EV infrastructure.
Supporters argue that this bill would encourage building
owners to make the decision to install fully functioning
electric vehicle charging facilities.
2)Existing state programs. The Alternative and Renewable Fuel
and Vehicle Technology Program (ARFVTP) provides grants,
AB 2675
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loans, loan guarantees, revolving loans, or appropriate
measures to reduce California's dependence on petroleum.
ARFVTP provides a loan and rebate program for small businesses
that meet the criteria to install electric vehicle charging
stations. Funded by the California Energy Commission, this
program may provide up to 100% coverage to lenders on certain
loan defaults. Borrowers may be eligible to receive a rebate
of 10 to 15% of the enrolled loan amount if they had one or
fewer late payments and the loan is paid off or it reaches 49
months.
3)How would the PIT and CT credit work? This bill allows a tax
credit of 10 percent of the amount paid or incurred for
electric vehicle infrastructure during the taxable year for
use a qualified dwelling, not to exceed $2,500. Any unused
credits could be carried over for four years or until
exhausted. In its analysis of the bill, the Franchise Tax
Board identifies a number of administrative concerns with this
portion of AB 2675, including:
a) As currently drafted, the maximum credit available for a
jointly file return, which reflects the tax return of two
taxpayers, would be $5,000, not $2,500.
b) The bill does not specify how long the electric vehicle
infrastructure must be placed in service in order for the
taxpayer to receive the credit. Therefore, a taxpayer could
claim a 10 percent credit for amounts paid or incurred for
the same infrastructure for multiple years.
c) Definitions remain broad and could cause confusion. For
example, the costs of upkeep, maintenance and improvements
to existing infrastructure could possibly qualify for costs
incurred for electrical vehicle infrastructure.
1)How would the partial SUT exclusion work? This bill excludes
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10% of the price of EV infrastructure from the state portion
of SUT, up to the first $400,000. In practice, this exclusion
is administratively difficult to implement.
For example, if a taxpayer purchased $500,000 in electric
vehicle infrastructure, this exclusion would result in only
$460,000 of TPP being subject to the state portion of the SUT
(6%). However, Bradley-Burns (1.25%) and any relevant local
sales and use taxes would still be collected on the full
$500,000. Assuming no local tax, the taxpayer in this example
would owe $27,600 in state SUT and $6,250 in Bradley-Burns,
compared to $36,250 without the exclusion, resulting in
savings of $2,400.
Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081