New hybrid incentive bills look to piggyback on federal tax credit

As you might remember from my little diatribe on Baltimore’s hybrid parking discount, ensuring that incentives are going first and foremost to the cleanest, most fuel-efficient hybrids can be tricky.

There’s a new bill in the South Carolina House of Representatives that I have to give some props to.  Well, as you can find on the HybridCenter’s incentives section, H. 4312 gets around that by simply piggybacking on the new Federal tax credits.  South Carolinians buying qualifying hybrids would get a state tax credit equal to 20 percent of the federal tax credit.  Here’s what this would mean for, let’s say, the ’06 Prius and Escape Hybrid:

Prius
Federal tax credit: $3,150
SC tax credit: $630
Total: $3,780

Escape Hybrid (front wheel drive)
Federal tax credit: $2,600
SC tax credit: $520
Total: $3,120

Now, this incentive isn’t perfect, as it attaches itself to a federal tax credit that has a counterproductive 60,000 vehicle per manufacturer cap, and a regressive gas-guzzler credit, but in all the federal tax credit is a good thing, so this is a nice way of keeping the incentive simple to administer, but maximizing the consumer benefit. 

Speaking of piggybacking, Illinois Congressman Rahm Emanuel has just introduced federal bill that would also seek to max out the hybrid tax credit.  Emanuel’s bill, the 'American Hybrid Tax Credit Act of 2005' would add another $3,000 to "a new qualified hybrid motor vehicle which is assembled in the United States” and cap the total credit at $6,000.  Right now, only the Escape Hybrid and Mercury Mariner would qualify for this perk, but both the Toyota Camry Hybrid and Nissan Altima Hybrid are going to be produced in the U.S. (in Kentucky and Tennessee, respectively), so they would qualify for the credit as well. 

An interesting side note on this is the fact that this benefit would also extend to diesel vehicles that could attain at least federal Bin 5 emission standards as mandated by the current tax credit law, but a recent report from Automotive News notes that, “None of the light-duty diesels on the market will qualify for tax credits. Their tailpipe emissions are still too dirty, under a standard set by the law that created the credits for vehicle buyers.”  Looks like diesel carmakers are going to have to do a bit more work to match the low smog forming emissions/high gas mileage mix that gasoline hybrid technology has been able to put on U.S. roads.

We’ll keep you posted on the progress of both these bills, and whether other state and federal initiatives crop up that look to “standardize” hybrid benefits.

Posted by: ScottN

Comments

[CarDave]

The purpose of the federal tax credit was to reward early users, so it is a good thing that they are being phased out as costs decrease and sales increase, Electric and hydrogen fuel cell cars are the answer, there just needs to be more R&D on them.