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Would-be owners of vehicles that fuel up electrically face a $200 annual fee and loss of a $5,000 state tax credit under pending state legislation. Photo by Joh Would-be owners of vehicles that fuel up electrically face a $200 annual fee and loss of a $5,000 state tax credit under pending state legislation. Photo by Joh

Would-be owners of vehicles that fuel up electrically face a $200 annual fee and loss of a $5,000 state tax credit under pending state legislation. Photo by Joh

April Hunt
By April Hunt March 16, 2015

Bill would nix consumers' tax break on electric vehicles but simliar credit for business remains

With state lawmakers revving up plans to tackle Georgia’s underfunded transportation system, some readers are confused about the often-changing plan.

As it stands, the House has passed HB 170 to raise about $700 million next year toward a $1 billion annual need to maintain existing roads and bridges.

The proposal is now before the Senate, which could adjust or completely overhaul the proposed taxes and cuts in the legislation.

One alert reader reached out on Twitter, remembering a claim in a story earlier this year and wondering if the House version still revokes a tax-credit for consumers’ electric cars, while leaving a similar break in place for businesses.

PolitiFact Georgia decided to check it out.

The necessity of tax hikes has long threatened talk of tackling the state’s backlog of transportation projects and resulting gridlock.

Amendments that would have undercut the tax rates in HB 170 were introduced right up until the House approved the proposal intact.

As is, the legislation would eliminate the state percent sales tax on gasoline and replace it with an excise tax of 29.2 cents per gallon.

Key to our question, it also would eliminate the popular $5,000 state tax credit for all-electric vehicles ($2,500 for low-emission vehicles) as of July 1. Owners of low-emission and zero-emission vehicles, meanwhile, would be required to pay a $200 annual registration fee.

State Rep. Jay Roberts, R-Ocilla, said that included the changes in the transportation tax bill he pushed through the changes because electric vehicle owners "practically pay nothing" to lease and operate those cars.

The tax credit cost the state $13.6 million in 2013. When combined with the $7.500 federal tax credit for buying a zero-emission electric vehicle, the state credit covers about 23 percent of the lowest-priced Nissan Leaf.

Atlanta was the top market in the nation last year for the Leaf, the nation’s top plug-in electric car, in part due to the generous state tax incentive.

Eliminating the credit and adding the annual fee is estimated to generate about $68 million in new revenue in 2016, according to the state Department of Audits and Accounts.

Not addressed in the pending legislation, though, is any change to tax credits for businesses.

PolitiFact Georgia had to go back to last year’s legislative session to find those breaks. Roberts was among 116 House members (and 41 Senators) who approved House Bill 348 last year.

That measure, which Gov. Nathan Deal signed into law last April, provides an income-tax credit of up to $20,000 for firms that purchase a heavy-duty alternative fuel vehicle and $12,000 for the purchase of medium-duty alternative fuel vehicles.

The credits are awarded on a first-come, first-served basis and are limited to $2.5 million each year for vehicles that run on electricity, liquid petroleum gas, natural gas or hydrogen.

(The break does not include vehicles under 8,500 pounds. That eliminates the Leaf, which weighs between 3,000 and 3,500 pounds, according to various automotive blogging and news web sites.)

Those tax credits expire on June 30, 2017. But it took no time for some firms to make good use of the breaks to switch to alt-fuel vehicles.

Sandy Springs-based UPS, for instance, said last spring it was buying 1,000 propane-powered delivery trucks as part of a $70 million investment.

Those trucks are used in more rural areas, where propane is more readily available, and can go up to 200 miles on a single tank.

So that means the current legislation does revoke a tax break available for consumers’ alternative-fuel vehicles, while leaving alone a similar credit for business use.

Several studies suggest the Georgia economy actually benefits from both of the tax credits, though. The break for businesses spurs investment and can create the bulk buying that encourage the rest of the market, said Bruce Seaman, an economics professor at Georgia State University.

The breaks for consumers’ electric vehicles keep more money in Georgia, in large part because the state does not have a very large interest in the oil industry but does generate a lot of economic activity around electricity.

One study, by the Keybridge Public Policy Economics consulting firm, concludes the state stands to lose $107 million to its GDP in the next five years if it eliminates the consumer tax break. Over 16 years, from now until 2030, the amount is $252 million.

The analysis also showed that without the credit, Georgia car owners would pay $155 million more to pump gas into their cars in the next five years, offset by saving about $60 million in electricity.

That means a double-hit to Georgia’s overall economy: lost fuel savings and an increase in spending on fuel (gas), whose profits leave the state.

"It’s pretty hard, economically, to justify one credit and not the other," Seaman said. "Eliminating the electric vehicle credit is a quest for funding. But it’s short-sighted not to consider the overall economic impacts, especially on commuting and our roads."

Senators may well weigh those considerations as they take up the legislation. House members, too, could discuss changes if the proposal returns to them with any amendments.

But the question here is whether, today, Georgia’s transportation legislation eliminates a popular consumer tax credit while retaining a similar break for businesses.

It does. One caveat: the tax credit for businesses, which is not mentioned in the latest proposal, would expire in two years anyway.

Both of those issues may be the topic of debate to come.

But as it stands, we rate the claim True.

Our Sources

Atlanta Journal-Constitution, "Georgia’s $1 billion transportation plan gains counties’ support," Feb. 10, 2015

Atlanta Journal-Constitution, "Bill would unplug Ga.’s electric-car tax credit," March 4, 2015

Atlanta Journal-Constitution, "UPS adding propane trucks to fleet," March 8, 2014

Nissan USA, 2015 Nissan Leaf information page, accessed March 13, 2015

Georgia General Assembly legislation, 2015-2016 session, House Bill 170

Georgia General Assembly legislation, 2013-2014 session, House Bill 348

Keybridge Public Policy Economics consulting, "Impact of Elimination of the Electric Vehicle Tax Credit on the Georgia State Economy," Feb. 11, 2015

Phone interview, Bruce Seaman, professor of economics, Andrew Young School of Policy Studies of at Georgia State University, March 6, 2015

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Bill would nix consumers' tax break on electric vehicles but simliar credit for business remains

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