Killing the electric car tax credit

Moderated by Tom Sabulis

Battle lines are being drawn over an attempt to eliminate Georgia’s $5,000 tax credit for electric vehicles. An Alpharetta Republican is re-introducing legislation this year to phase out the credit, one of the most generous in the country. Today, he explains the rationale for his bill in an exclusive column for the AJC. But EV supporters say removal of the credit, used primarily by buyers of the Nissan Leaf, could take the steam out of the electric-car market here. A Nissan Leaf owner and member of the Georgia Public Service Commission outlines why it’s a bad idea to kill the credit.

Keep Georgia’s EV tax credit in place

By Tim Echols

Georgia is second only to California in electric vehicles, but if we are not careful, that silver medal is about to be ripped from our necks.

Legislators led by Rep. Chuck Martin, R-Alpharetta, believe Georgia’s $5,000-per-vehicle state tax credit is simply too generous. In the 2014 General Assembly, Martin’s bill to drastically cut the tax credit for these cars passed the House of Representatives only to die in the Senate on the session’s last day.

Rep. Martin plans to reintroduce a “kinder and gentler” version of his bill this year. After all, he says, the state has granted about $22 million in credits to Georgia taxpayers who have purchased or leased these cars.

Meanwhile, Atlanta has become the No. 1 market for Nissan’s LEAF — the company’s compact electric car. Besides Nissan and the consumers who get the credit, Georgia benefits in several ways:

Benefit No. 1Pure electric vehicles leave money in the state. According to the Georgia Department of Economic Development, for every 1 percent of petroleum-based miles displaced by electric vehicles in Georgia, approximately $201 million dollars remain in the state annually. Each pure electric vehicle keeps $2,242 a year in state by fueling with electricity rather than petroleum-based products. For a state without a single oil well or refinery, this is huge.

Benefit No. 2The tax credit is spent in Georgia. Remember, the person who buys or leases one of these cars take some risks because an electric car has many limitations; I know this from personal experience. The tax credit has been an effective incentive at getting Georgians to take the chance. And when they get that $5,000 back after filing their tax returns, they often spend it on consumer goods, home improvement projects, a vacation or college tuition, or they just put the money in the bank for a rainy day. Folks spending money helps local businesses.

Benefit No. 3Metro Atlanta air quality is improved. The annual emissions test your car or truck undergoes makes sure your pollution controls work to specifications. Electric vehicles have no tailpipe and, therefore, zero emissions. Yes, they may derive their power from coal or natural gas — whatever power plant is generating the electricity. Even then, for a traditional gasoline car to pollute less than what it took to power that EV in Georgia, one would have to average 46 miles per gallon, according to a study by the Union of Concerned Scientists. In the Pacific Northwest, gas cars would need to average a whopping 73 mpg to equal the electric vehicle.

Benefit No. 4 Electricity use is reduced. A Georgia Power study shows people who have electric cars lower their overall energy bills despite using electricity to charge their cars. The power company has a special rate to encourage people to get electric vehicles and charge them overnight — when power is cheap and plentiful. According to a study of 1,000 of these Georgia electric car owners, the program is working. These customers reduced their annual electric bills by $180 each — even though they charged their cars and didn’t buy gasoline for the entire year. By shifting when they used their energy, they helped lower peak demand and saved all of us money. So not only are electric cars not producing any greenhouse gases, entire households are cutting their energy usage and saving dollars. That energy-efficiency saving is being “purchased” now through the tax credit given to electric car owners.

Benefit No. 5Electric cars are a millennial magnet. As I sat recently with Mayor Kasim Reed discussing Atlanta’s success with electric cars, I asked him what he thought was the greatest benefit of the tax credit. He didn’t hesitate. He said it has sent a strong message to millennials about our priorities. “Millennials care about the environment — an essential characteristic for our city,” Reed said. The state’s investment in electric vehicles, he said, makes Atlanta a more livable city where people and companies increasingly want to be.

Our current credit benefits only pure electric cars, but voices throughout the state are urging lawmakers to include plug-in hybrid electric vehicles as well, covering versions of the Ford CMAX and Toyota Prius and even the Porsche Panamera. This would enable Georgia to move to a larger selection of electric vehicles, since plug-in hybrids permit both extended-range-battery electric driving and inter-city travel while significantlyhelping to reduce CO2 and other emissions.

Maybe with a little luck, we can take away California’s dominance in the EV market the same way we have been luring movie makers to the Peach State.

Tim Echols serves on the Georgia Public Service Commission and leases a Nissan LEAF.

Time to phase out credit

By Chuck Martin

Would the average Georgian support a taxpayer-funded program that provides a nearly free car to a narrow group of mostly in-town citizens? Most Georgians would be shocked to learn such a program exists: the state alternative fuel tax credit, passed in 1998.

This month, I will introduce legislation to revise, reduce and provide for a phased elimination of this credit. Last year’s bill passed the House twice but failed in the Senate. In 2015, this peculiar credit will cost the state approximately $50 million, based on the number of cars purchased in 2014. Over the next 20 years, the state is predicted provide over $1 billion to the recipients of this credit.

Who are the recipients of this credit? Approximately 18,000 to 20,000 in number by the end of 2014, they largely lease a Nissan Leaf. Other hybrids such as the Toyota Prius Plug-in Hybrid and the Chevy Volt are excluded, even though data compiled by the U.S. Department of Energy shows the Toyota actually produces fewer pounds of CO2 emissions each year, and the Chevy is comparable to the Leaf.

How lucrative is the credit to its recipients? Multiple articles, testimonials and even advertisements from local dealers point out that a person can drive a Nissan Leaf on a 2-year lease for “almost nothing” after applying a $7,500 federal credit and taking a $5,000 state credit.

Savvy Leaf drivers can simply turn their old vehicles in at the end of that lease and repeat the process — leading potentially to years of cost free, state-subsidized driving. And while the related federal subsidy is set to eventually phase out, this gift from the Georgia taxpayer goes on and on forever, if nothing is done. And lastly, such drivers also get an indirect subsidy from all other drivers. Since a Leaf driver buys no fuel at all, all road maintenance is paid for by the rest of us through the gas tax.

The state is already grappling with shrinking gasoline tax collections because increasingly fuel-efficient cars pay less taxes per miles driven. Redirecting the alternate fuel tax credit — or as some call it, the “Leaf” tax credit — to pay for 20-year bonds in the state budget would fund more than a half-billion dollars in road and bridge improvements statewide.

Whether you favor subsidies for a broader group of low-CO2 vehicles or oppose such subsidies entirely, the current credit in Georgia needs to change. Is it really good state policy to pay $50 million per year to let a select group of 10,000 or more individuals drive a particular type of car for free or almost free?

State Rep. Chuck Martin is a Republican from Alpharetta.

 


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