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Do Electric Cars Still Need Support From Taxpayers?

Electric cars charging at the Washington State Capitol
Tom Banse
Northwest News Network
Electric cars charging at the Washington State Capitol

Have electric cars been on the market long enough to stand on their own without public subsidies?

That's a question state lawmakers in Olympia and Salem are wrestling with this winter.

If you buy a fully-electric car in Washington state, you pay no sales tax. That incentive expires this summer unless the Washington Legislature chooses to extend it. The conservative-leaning Washington Policy Center makes the case for letting it lapse.

"State data show these breaks go primarily to the wealthy who would have purchased these vehicles anyway," WPC environmental director Todd Myers wrote in an email. "As a result, the policy does little to incentivize purchase of EVs and yields almost no additional environmental benefit."

Automakers Nissan and General Motors told a state Senate committee Wednesday that the tax incentive is effective and needed. Nissan lobbyist Michael Mann urged a 6-year extension.

"It's important to recognize that this industry is still in its infancy,” he said. “Just over one in every 1,000 vehicles in Washington is electric."

Oregon doesn't charge sales tax, so electric car advocates and sympathetic lawmakers have introduced legislation to offer a $3,000 rebate on battery-powered and hydrogen fueled cars.

"We have a little more of a challenge here," Drive Oregon executive director Jeff Allen said noting the difference between foregoing some tax revenue versus securing real money in the state budget to pay rebates. Drive Oregon is a nonprofit that promotes the electric vehicle industry.

"We're pushing rebates to bring [electric vehicle prices] more in the reach of the average Oregonian," Allen said in an interview. "These vehicles are great for the region... They are essential to meeting our climate and environmental goals."

Allen estimated that no more than $15 million would be needed over the next two years to cover rebates for electric cars and the lesser amounts to be offered to buyers of plug-in hybrids and battery-powered motorcycles.

In Olympia, one speaker labelled the initial round of testimony on Wednesday before the state Senate Transportation Committee as "a love-in." The panel heard from numerous supporters of extending the electric car sales tax exemption.

Energy and trucking companies and business associations spoke in favor of a separate proposal to expand the tax break to commercial alternative fuel vehicles, such as trucks powered by compressed natural gas or propane.

To avoid the appearance of subsidizing luxury buyers, the measure to extend Washington's electric car sales tax break places a new cap on the exemption. The break would be limited to the first $45,000 of each sale.

"If you can afford to buy a $65-70,000 car, you are going to pay some sales tax on everything above $45,000," said the legislation's prime sponsor, Democratic State Sen. Mark Mullet. "If you find a way to promote this technology, you will lower carbon emissions in the state of Washington without having to resort to a (carbon) tax."

Neighboring Idaho offers no incentives to spur electric car purchases.

Meanwhile, President Barack Obama's proposed 2016 budget released Monday seeks to boost the federal electric vehicle tax credit to a maximum of $10,000 -- up from the current $7,500 --and expand it to include other alternative fuels such as compressed natural gas vehicles. In addition, the administration wants to convert the end-of-the-year tax credit to a point of sale rebate. The president has proposed this before, but has not yet won favor in Congress.

Copyright 2015 Northwest News Network

Tom Banse covers national news, business, science, public policy, Olympic sports and human interest stories from across the Northwest. He reports from well known and out–of–the–way places in the region where important, amusing, touching, or outrageous events are unfolding. Tom's stories can be found online and heard on-air during "Morning Edition" and "All Things Considered" on NPR stations in Washington, Oregon, and Idaho.