Time to revisit plug-in tax credit legislation?
Is its battery big enough?There has been an AP story all over the Internet covering the difficulties of reaching President Obama's 1 million plug-ins by 2015 goal. Cheap gas, a struggling economy, bankrupt automakers, and excessively expensive technology, etc. make the goal impossible without massive help from the government.
Thus far the government has offered tens of billions in loans and aid to help automakers retool, in addition to plug-in tax credits for consumers worth up to $7500. While these tax credits are not as heavily skewed towards large battery plug-ins as originally proposed, they are still skewed towards vehicles that some studies have questioned in terms of efficiency.
Now, I don't want to argue against large battery plug-ins, but I do wonder if this legislation is as effective and efficient as it could be. Even worse, I wonder if this legislation is semi-counterproductive.
For instance, with plug-in profitability possibly a decade away, are plug-ins more about CAFE balancing than an aggressive attack on oil dependence? Also, will these vehicles be profitable after tax credits expire?
Is the size of the battery really the key this early in the game, or should there be more focus on putting lithium into as many cars as possible as quickly as possible?
Labels: CAFE, Foreign Oil Dependency, hybrid tax credits, lithium battery, plug-in hybrid vehicles
posted by Dahcredyns at
7:20 AM
2 Comments:
This is not quite on point but is a very important tax issue to the hybrid car community:
Currently Congress and around 20 states are considering replacing the gas tax with one based on vehicle mileage (VMT). Hummers and Hybrids... same tax rate.
Sorry for the following long post but this mileage tax concept is gaining momentum. Each day it seems another state begins to consider it.
There’s another alternative to VMT that hasn’t been discussed much (if at all) in the recent gas tax/mileage tax debate. It’s a tax based on vehicle efficiency assessment (EVA). If the VMT is the best option identified by the congressional commission, then EVA is a better alternative using the same criteria the commission used.
EVA uses software/RFID scanner at the pump to assess per-gallon tax based on individual vehicle information. Initially, the information is static, residing in a bar-coded windshield decal with information already contained in the Vehicle Identification Number – the make, model, year, etc. This allows the individual vehicle to be taxed a variable rate based on fuel efficiency (model, make, weight, year, etc.) As the market shifts and gas vehicles are replaced by plug-in hybrids, EVA can be upgraded to use the same scan to capture vehicle performance data (including, if desired, mileage) from vehicle computers (blue-tooth, etc.), presumably on newer vehicles.
Using the commission’s criteria, here’s how EVA and VMT compare:
• Is it fair across geographic regions and income groups
• Does it promote efficiency
• Is it politically viable and is implementation easy and affordable
• Will the future revenue stream be sustainable
Let's compare VMT with EVA on these four points:
Is it fair across geographic and income groups?
Because the VMT bases the tax on miles driven, it is inherently unfair to rural drivers and long-distance commuters. EVA, on the other hand, is initially based on vehicle make and model, not miles so It doesn’t penalize rural drivers. And, if I’m correct, average rural income lags the average metropolitan income levels (and if data existed comparing income levels of just vehicle owners in the two areas I would guess the income disparity is even greater, as many low-income urban residents don’t own cars and be excluded from the data, significantly increasing the average metropolitan income, widening the rural-metropolitan income gap. EVA is income neutral.
Does it promote efficiency?
VMT doesn’t add much to the current tax to discourage the use of gas-guzzlers or encourage the use of efficient vehicles. It may encourage shorter trips but that’s a reduction in consumption, not the efficiency of consumption. Do we really want a rural driver of a hybrid or motorbike to pay a higher tax per gallon than the suburban Hummer driver going 3 miles to the mall? EVA, on the other hand, would assess the hybrid and Vespa at a lower per-gallon rate than the Hummer.
Is it politically viable and easy/affordable to implement?
Passing a tax that is unfair to rural drivers and long-distance commuters, disappoints efficient vehicle advocates and privacy advocates (who see VMT as “track-and-tax”) won’t be easy. EVA, by comparison, rewards fuel-efficient vehicles, doesn’t violate privacy unless mileage is used at some future date (the VIN data is static and already in the system), and EVA treats all drivers –rural and suburban – equitably.
And cost? While both VMT and EVA require POS scanning to capture vehicle information (VIN or odometer) VMT faces the massive task and expense of retrofitting all vehicles with GPS tracking- or odometer-reading equipment. EVA requires just a bar-coded VIN decal on the windshield, easily distributed by existing motor vehicle offices. EVA could even be an opt-in program with non-participating drivers paying the maximum tax and all enrolled vehicles – even that Hummer – paying less, with hybrids and motorcycles paying the least.
On the question of revenue sustainability, it is true that as gas consumption declines the tax model has to change to offset that decline. But keep in mind that a premature switch to mileage (if VMT is not politically D-O-A) could slow the migration to hybrids by taxing guzzlers and hybrids at the same rate. And some forecasts estimate that by 2030 plug-in hybrids will only represent only 15% of new vehicle sales and only 9% of vehicles on the road. We'll be taxing gas for a long time to come and need to keep rewarding the use of hybrids.
Efficient vehicle assessment makes much more sense.
That's a lot to consider, but you make some very interesting and important points.
The last I heard, Obama doesn't support either a gas tax or a VM tax, and I think he could control any such measure coming out of Congress, at least this session.
The states are another matter that could cause some problems, but I don't think there is enough momentum for such a measure in most states, if any, just as there isn't for a gas tax. So, I don't think anything major, other than cap-and-trade, is coming on this issue soon.
Some solution, however, will be required eventually even if just to maintain infrastructure, let alone fund green initiatives.
And, I completely agree with you that a simple VM tax is not the best path forward. In the long run a simple gas tax probably isn't either, but I'd settle for one just to put a bottom on gas prices around $3.00 per gallon in the interim.
Long term, however, I'm sure we will have to move more towards your EVA.
I have to run out for a bit, but I'm going to reread your post again later.
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