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This legislation would amend the tax law, to exempt the retail sale of plug-in hybrid electric vehicles from state sales and compensating use taxes, and to authorize cities and counties the authority to grant similar exemptions from local sales and use taxes.
Plug-in hybrid-electric vehicles are a promising alternative that uses electricity to displace a significant fraction of vehicle petroleum consumption A plug-in hybrid-electric vehicle (PHEV) is a hybrid-electric vehicle (HEV) with the ability to recharge its electrochemical energy storage with electricity from an off-board source (such as the electric utility grid). A PHEV can travel some distance on a full charge, and then the PHEV can continue driving using liquid fuel.
PHEVs are well-matched to motorists’ driving. The majority of daily travel is relatively short, with 50 percent of days having less than 30 mi (48 km) of driving. Under most conditions, a PHEV owner could avoid the use of liquid fuels during a typical commute. However, for PHEVs to have a substantive effect on the State’s fuel consumption, they must penetrate the market and extrapolate these savings to the fleet level.
This proposed small tax exemption is an affordable means to encourage the purchase of plug-in hybrid electric vehicles. Similar incentives have been enacted in prior years to encourage consumers to consider the purchase of hybrid and other alternative fuel vehicles. These were of limited duration, and phased out over several years after consumer acceptance began to rise.
The Business Council strongly supports the adoption of climate policies with co-benefits. We support the adoption this legislation because it is an initiative that provide near-term and concrete changes that address GHG while improving the quality of human life (enjoyment, health, economic advancement) through the advancement of market innovation.