BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 578 (Block) - Income and corporation taxes: credit:
electric vehicle charging stations
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|Version: April 13, 2015 |Policy Vote: GOV. & F. 6 - 1 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 18, 2015 |Consultant: Robert Ingenito |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 578 would enact a tax credit for firms that purchase
electric vehicle charging stations.
Fiscal
Impact: The Franchise Tax Board (FTB) estimates that this bill
would result in a General Fund revenue loss of $1.3 million in
2015-16, $3.3 million in 2016-17, and $3.5 million in 2017-18.
FTB administrative costs have yet to be ascertained, but would
likely exceed $50,000 annually (General Fund).
Background: California law allows various income tax credits, deductions,
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and sales and use tax exemptions to provide incentives to (1)
compensate taxpayers that incur certain expenses, such as child
adoption, or (2) influence behavior, including business
practices and decisions. These incentives are typically enacted
to encourage specific taxpayer activity. The Department of
Finance is required to annually publish a list of tax
expenditures, currently totaling roughly $55 billion per year.
California currently leads the nation with respect to both (1)
the number of electric vehicles, and (2) the number of charging
stations necessary to power them. Both numbers have grown
sharply, and is likely spurred by California's mandate to
require automakers to manufacture zero emission vehicles (ZEVs).
Specifically, California reportedly has nearly 6,600 public
Level 2 electric vehicle charging stations, and about 650 DC
fast-charging stations as of March, 2015, about four times as
many as any other state.
Current federal law provides a credit for alternative fuel
vehicle refueling property that includes charging stations for
electric vehicles. This incentive originally expired at the end
of 2013, but was retroactively extended for one additional year.
The federal credit allows a 30 percent credit against income tax
for qualified alternative fuel vehicle refueling property
brought into service during the taxable year, generally capped
at $30,000. For consumers who purchase qualified residential
fueling equipment, the cap is $1,000. There is no counterpart in
current state law.
Proposed Law: This bill would
enact a tax credit equal to 30 percent of the cost for
taxpayers purchasing any Level 2 or direct current fast charging
electric vehicle station. The charging station must be placed
in service on or after January 1, 2016, and must be depreciable,
thereby limiting the credit to business taxpayers. The credit
cannot exceed $30,000 per year. FTB would be required to
prescribe regulations necessary to implement the credit.
Staff
Comments: FTB's revenue estimate for this bill anticipates that
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approximately 140,000 qualified charging stations will be
installed in the State by 2020. To reach this goal,
approximately 23,000 charging stations would need to be
installed each year for the next six years. Media reports
suggest that several large-scale projects planned by various
firms could exceed the $30,000 maximum credit generation by a
single taxpayer. Using data from public release bulletins, FTB
assumes that approximately 25 percent of charging stations put
into service each year would generate a credit, resulting in an
estimated 5,750 charging stations. Public charging stations cost
approximately $2,500 and would generate an estimated $4.3
million in credits. FTB assumes that 80 percent of the credits
would be used in the year they are generated, while the other 20
percent would be carried over and used in subsequent tax years.
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