BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 1304
                                                                  Page  1

          Date of Hearing:   May 28, 2009

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Kevin De Leon, Chair

                    AB 1304 (Saldana) - As Amended:  May 14, 2009 

          Policy Committee:                              Revenue and  
          Taxation     Vote:                            9-0

          Urgency:     No                   State Mandated Local Program:  
          Yes    Reimbursable:              No

           SUMMARY  

          This bill exempts electric vehicles (EVs) from the sales and use  
          tax until January 1, 2015. The bill also:

          1)Limits the exemption to 100 electric vehicles per  
            manufacturer.

          2)Defines an "EV" as passenger vehicle that uses electricity as  
            its sole source of propulsion (thus hybrids would not  
            qualify).

           FISCAL EFFECT

           The Board of Equalization estimates that the exemption would  
          result in annual revenue losses of about $432,000 through  
          2014-15, of which $288,000 would be GF and the balance would be  
          special and local funds. 

           COMMENTS
           
           1)Background  . As tangible personal property, EVs are subject to  
            California's sales and use tax. Based on data from the U.S.  
            Energy Information Agency (EIA) and the California Air  
            Resources Board, there are about 5,000 EVs in California, and  
            the number is projected to increase about 220 units per year.  
            The average price is about $40,000. BOE reports that there are  
            currently six manufacturers of EVs, each of which would  
            receive sales tax exemptions for 100 vehicles under this bill.

          2)  Rationale.  This bill is intended to accelerate the market for  
            EVs by reducing their cost to customers in California.  








                                                                  AB 1304
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            Proponents assert that EVs address the problems of oil  
            dependence, air pollution, and climate change.

           3)Opponents  (California Tax Reform Association and the American  
            Federation of State, County and Municipal Employees) express  
            doubt about the impacts of a sales tax exclusion on the usage  
            of electric cars, and state that if such an exemption were  
            demonstrated to be valuable, it should be paid for out of the  
            proposed carbon fund, rather than the state's General Fund. 

           Analysis Prepared by  :    Brad Williams / APPR. / (916) 319-2081