Democratic California Gov. Jerry Brown’s mission to eliminate the state’s gas-powered vehicles could come screeching to a halt if President Donald Trump’s tax proposal passes through Congress unscathed.
The tax bill would zero out the Plug-In Electric Drive Vehicle Credit, a program giving a $7,500 tax credit to people who purchase Teslas and other electric vehicles. California provides a $2,500 state rebate for such customers – they act in tandem to reduce Tesla prices by nearly $10,000.
But the legislation, which seeks to slash the corporate tax rate to 20 percent from 35 percent and reduce the number of income tax brackets, would likely dash Brown’s hopes of keeping the anti-gas vehicle crusade on the straight and narrow. Reports show the bill could destroy the push.
Data show that the elimination of the tax credit could be a death knell for the budding green energy industry, especially for automakers that can’t mass produce electric vehicles at the scale necessary to replace gas guzzlers in the market. Tesla relies heavily on the credit for survival.
A July 10 data analysis from The Wall Street Journal, for instance, shows that there were no new Tesla Model S sedans and Model X SUVs registered in Hong Kong the month after that country revoked the tax credit.
There were 2,939 Tesla vehicles registered in March before the April 1 redaction of the credit, according to WSJ, and nearly 3,700 entering the department’s books for the first quarter of 2017. The end of the tax break was announced in February.
The bulk of Tesla’s fleet of vehicles were sold in California in 2015, according to Edmunds, a group that researchers automotive sales in the U.S. California citizens made up nearly 50 percent of Tesla’s customers that year. The next nine states made up nearly 33 percent, while the remaining 40 states combined were below 22 percent of Tesla’s overall market.
A bill nixing the federal tax credit could bring dark days for Brown, who has staked out a claim as one of the country’s most ardent anti-Trump activists. He has gone so far as to initiate a campaign designed to push states into undermining the president’s decision to pull out of the Paris climate accord.
Brown leaned heavily on the federal electric car tax credit to push his climate policy agenda. He set a goal in 2012 of having 1.5 million electric vehicles on the road by 2025 – the move included a call to banish gas powered vehicles all-together.
“Governor Jerry Brown has expressed an interest in barring the sale of vehicles powered by internal-combustion engines,” Mary Nichols, chairman of the California Air Resources Board, told reporters in September about what Brown might have in store for the state.
He advocated and eventually passed a massive gas tax earlier this year to prompt motorists to make the switch – a decision that could ultimately come back to bite him and California if Republicans move forward on eliminating the credits.
California leap-frogged Pennsylvania to become the state with the largest gas tax – Pennsylvania’s tax settles in at $0.50 cents per gallon, with New York at $0.42 cpg following closely behind. The Golden State’s gas tax, meanwhile, increased from $0.40 to $0.52 cpg.
Gas taxes are supposed to provide revenue for road construction, maintenance, repair, and improvements, but states typically divert much of the money to other sources. In 2013, gas taxes and motor vehicle license fees paid for 40 percent of state and local road spending.
Californians signed petitions shortly after the tax passed on a recall effort against Democratic state Sen. Josh Newman for his vote in favor of the bill, and another lawmaker is moving forward on an initiative to repeal the unpopular gas tax.
Three Southern California radio talk show hosts embarked on the recall campaign targeting Newman, a first-term Democratic legislator who barely edged out his Republican opponent in November. Democratic lawmakers eventually passed a procedure making it more difficult to recall senators.
“That’s the only thing that works, is to take one of their team members out, politically,” Ken Chiampou, a co-host of “John and Ken” on KFI-AM in Los Angeles, told reporters Thursday. “If there’s no consequence, no punishment, then they’re going to keep right on doing this crap.”
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