California Bill Proposes Lower Sales Tax for Plug-in Cars

By · April 22, 2013

Nissan Leaf shopper

All plug-in cars would get cheaper in California, if AB 1077 is passed.

An official press event was held on Friday to promote a bill that would change the way electric cars and other alternative vehicles are valued for taxation and vehicle licensing purposes. Supported by EV advocates as well as automakers, Californian Assemblyman Al Muratsuchi's bill would reduce the basis for taxes and fees applied to plug-in cars by using the post-incentive transaction valuation for the car, not the pre-incentive sticker price. Californian Assembly Bill AB1077 was introduced on February 22.

The result would be to effectively drop in the price of buying a plug-in car of between $500 and $1,000, depending on the car being purchased.

The press event took place at Hermosa Beach city hall, just south of Los Angeles International Airport. It was attended by representatives from Plug-in America, General Motors, Nissan and Honda, as well as a dozen or more local EV drivers.

A More Accurate Tax

Currently, anyone buying a plug-in or alternative-fuelled vehicle in California has to pay a sales tax equivalent to 8 percent of the sticker price of the car they've just bought, the same as for any other new car.

Yet California's generous plug-in car incentives, combined with a federal tax credit of up to $7,500 for anyone buying a plug-in or alternative fuelled car, means that the effective price of a plug-in car in California is up to $9,500 less than the listed sticker price.

As one example, instead of charging sales tax and registration fees on a $48,500 Toyota RAV4 EV, the bill proposes charging sales tax and registration fees on the actual price paid by the buyer after $9,500 of federal and state incentives have been applied, reducing the taxation and registration value to $39,000.

As Muratsuchi points out, that penalizes Californians who buy an alternative-fuelled or plug-in car, since they are paying disproportionally high purchase fees compared with buyers of conventional cars. Moreover, Muratsuchi notes, it could put some Californians off buying a plug-in or alternative fuel car altogether.

While there is wide support for the bill from owners and automakers alike, it still has to make its way through both houses before it can become law. The first real challenge for the bill will take place on May 5, when it will be heard by the Californian Assembly's Revenue and Tax Committee.

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