Death of Major Alt-Fuel Tax Credits a Signature Away in Georgia


On Tuesday night, Georgia lawmakers reached a compromise and approved a transportation funding package that includes provisions to eliminate state income tax credits for alternative fuel vehicles (AFVs) and establish a new fee for AFV owners. The bill, H.B.170, now goes to Gov. Nathan Deal, R-Ga., who has said he will sign the legislation into law.

The state House and Senate both passed versions of the plan in March in an effort to raise money for transportation infrastructure. However, the two chambers needed to reconcile differences between their iterations of the bill, namely proposed rates for excise taxes on gasoline and diesel, before sending it to the governor's desk.

In a statement, Gov. Deal calls the comprehensive transportation bill “landmark” legislation that will “give Georgia dedicated resources to maintain the state's roads and bridges.”

“Georgia's legislators demonstrated leadership, foresight and courage last night as they took the tough but much-needed steps to pay for our ever-growing transportation needs,” says Deal. “We faced obligations that could no longer be ignored, and current resources were simply not enough to preserve the infrastructure we need to get to work, to safely take children to school on buses and to keep the lifeblood of our economy pumping.”

The finalized bill has many provisions and still includes the measures related to AFVs.

As NGT News previously reported, the legislation will do away with state income tax credits for the purchase or lease of new zero-emission (battery-electric, not including plug-in hybrid) and low-emission (dedicated natural gas and propane) vehicles beginning July 1.

Georgia's current credits include the lesser of $5,000 or 20% of the cost of a zero-emission vehicle and the lesser of $2,500 or 10% of the cost of a low-emission vehicle.

The legislation will also institute a new annual fee for vehicles that run on electricity. The fee will be $200 for non-commercial and $300 for commercial vehicles each year. Â

Don Francis, coordinator and executive director of Clean Cities-Georgia, says the fee provision's language is unclear: First, it remains uncertain whether plug-in hybrid vehicle owners will have to pay the fee. Complicating matters further, the provision specifically exempts vehicles that run primarily on natural gas or propane; however, the Senate added the terms ‘bi-fuel’ and ‘duel fuel’ to the bill but did not specifically define their applications.

“The expert opinion at the moment is these terms only pertain to propane and natural gas where both bi-fuel and dual-fuel engines are available,” says Francis. Â

Even with the bill's ambiguity, Francis warns the legislation's AFV policy changes are expected to “initially kill the market for electric vehicles,” but he suggests the impact on propane and natural gas vehicles might not be as severe.

“The two provisions will raise the cost for a two-year lease of a vehicle like a Nissan LEAF by more than $5,500 and nearly $6,000 for a three-year lease,” says Francis. He notes that the BMW i3 is also currently available in the Georgia market, and Kia's Soul EV soon will be.

“We will not know the full extent of the damage until the March sales numbers are released, where comparison can be made between 2014 and 2015 sales to date and for March,” explains Francis. “It is expected that come August, PEV's other than Tesla and BMW will, for all practical purposes, come to a stop.

“The tax credit also applied to dedicated natural gas and propane light-duty vehicles,” he continues, “but there were only about 200 tax credit certificates issued for natural gas and propane vehicles over the life of the tax credit.”

Nonetheless, this legislation isn't the death knell for all alt-fuel incentives in Georgia. According to a guide provided by Francis, the state still offers tax credits for electric vehicle infrastructure and will begin providing tax credits in July for medium- and heavy-duty AFVs under a law passed last year. In addition, Georgians can also take advantage of some alt-fuel incentives from utilities, such as Georgia Power.

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