BILL ANALYSIS
AB 1304
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Date of Hearing: May 18, 2009
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Charles M. Calderon, Chair
AB 1304 (Saldana) - As Amended: May 14, 2009
SUSPENSE
Majority vote. Tax levy. Fiscal committee.
SUBJECT : Sales and use taxes: exemption: electric vehicles
SUMMARY : Provides a sales and use tax (SUT) exemption for
electric vehicles (EVs). Specifically, this bill :
1)Limits the exemption to 100 EVs per manufacturer.
2)Defines an "EV" as a passenger vehicle that uses electricity
as its sole source of propulsion power.
3)Provides that, notwithstanding existing law, the state shall
not reimburse any local agency for lost SUT revenues.
4)Takes immediate effect as a tax levy, but only becomes
operative on the first day of the first calendar quarter
beginning more than 90 days after its effective date.
5)Sunsets on January 1, 2015.
EXISTING LAW imposes a:
1)Sales tax on retailers for the privilege of selling tangible
personal property (TPP), absent a specific exemption. The tax
is based upon the gross receipts from sales of TPP in this
state.
2)Use tax on the storage, use, or other consumption in this
state of TPP purchased from any retailer for storage, use, or
other consumption in this state, absent a specific exemption.
FISCAL EFFECT : The Board of Equalization (BOE) is currently
working on a revenue estimate for this measure.
COMMENTS :
AB 1304
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1)The author states, "California has shown extraordinary
effectiveness in moving clean technologies out of the
laboratory and into the mainstream while creating jobs and
entirely new industries. The California Green Innovation
Index indicates that between 1990 and 2006, the state's green
technology sector grew 84 percent, with much of this growth
linked to [the] solar and green transportation sectors. As
the demand for a shift to electric-drive technology increases,
EVs linked to a cleaner power grid concurrently address the
problems of oil dependence, air pollution, and climate change
while building clean technology transportation." The author
goes on to state, "There are at least half a dozen states that
have either passed or have under consideration tax credits for
EVs. Automotive companies are competing to be first to market
plug-in hybrids and full electric vehicles. By exempting the
sales tax, California will become more attractive to car
manufacturers as a place to invest their business. It is
imperative that California's market be ready for these
vehicles and barriers to implementing are minimized."
2)Proponents state that AB 1304 will accelerate the market for
EVs by reducing their cost to consumers in California.
3)Opponents state, "We do not believe that there is any evidence
that such an exemption would [have] a meaningful impact on the
deployment of electric cars. However, if such an exemption
were to be demonstrated to be valuable, it should be paid for
out of the proposed carbon fund created by SB 31 and AB 231,
not the state's General Fund."
4)Committee staff comments:
a) What qualifies as an EV? : This bill provides a complete
SUT exemption for EVs, which this bill defines as passenger
vehicles that use electricity as their sole source of
propulsion power. Committee staff understands this to mean
that the exemption would not apply to hybrid vehicles that
use both fuel and electricity for propulsion.
b) Recent amendments : The author recently amended this
bill in an effort to reduce revenue losses. Specifically,
the author has reduced the exemption's scope to cover only
EVs and has limited the exemption to 100 EVs per
manufacturer. In addition, the author has made the SUT
AB 1304
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exemption a complete, rather than a partial exemption, to
ease administration. Finally, the author has provided a
January 1, 2015 sunset date so that the Legislature can
review the efficacy of this tax expenditure in the future.
REGISTERED SUPPORT / OPPOSITION :
Support
Plug In America
Opposition
American Federation of State, County and Municipal Employees,
AFL-CIO
California Tax Reform Association
Analysis Prepared by : M. David Ruff / REV. & TAX. / (916)
319-2098