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Bill would help hybrid-car owners
Tax credits would be higher for those using alternative fuel sources
By JIM DuPLESSIS
Staff Writer
A proposed state tax credit could save you hundreds if you buy a car propelled by something other than just gasoline.
S.C. House Majority Leader Jim Merrill, R-Charleston, has drafted a bill to extend a federal tax credit to the state level for cars powered by hybrid and alternative-fuel engines.
If enacted, the state income tax credit would be 20 percent of the federal income tax credit for low-polluting cars fueled by diesel, natural gas or a hybrid, such as those pairing gasoline engines with battery-powered motors.
With the spike in gasoline prices, it became pretty much a no-brainer to encourage hybrid usage if we could reduce our dependence on gas and oil, Merrill said.
A buyer of a Toyota Prius gasoline-electric hybrid in 2006 would receive the highest credits: $3,150 federal and $630 state, or a total of $3,780, according to estimates from the American Council for an Energy-Efficient Economy.
The smallest credits would be for buyers of a Chevrolet Silverado or GMC Sierra hybrid: $250 federal and $50 state.
Merrill said he began considering the bill in spring 2004, drafted it last summer, and prefiled the bill in November. It has been referred to the House Ways and Means Committee.
The state must conduct a study to estimate how much the credit would reduce state tax revenues, but Merrill expects it will be minimal.
U.S. sales of hybrid vehicles the most common qualifying for significant tax credits are expected to approach 200,000 this year. That is up from about 85,000 in 2004 and 25,000 in 2003.
Those numbers are expected to increase next year, but they will still account for a tiny portion of the 17 million cars and trucks sold each year, said Jim Kliesch, a researcher at the American Council for an Energy-Efficient Economy.
Sales are expected to be boosted in part by federal tax credits that begin for cars bought in 2006 and end in 2010, Kliesch said.
States have enacted a patchwork of incentives to boost sales of cars that reduce dependence on oil and cut pollution. In Maryland, for example, the 5 percent sales tax is waived for qualifying vehicles, he said.
Every little bit counts, Kliesch said.
For those who buy hybrids for cost savings, the payback depends on the cost of gas and the sticker price and fuel efficiency of the vehicle they consider comparable.
Kliesch said the 2005 Prius should be compared with the 2005 Toyota Camry because they both have about the same interior space.
The Camry is closer in price to the Prius, making the difference in upfront costs lower than the tax credit, making the payback instant. Even if you compared the Prius with a Ford Focus hatchback for less than $16,000, the payback on the Prius would be three years with the credits and $2 per-gallon gas.
But the comparison is less favorable if the Prius is compared with a $10,885 Toyota Echo, which has about 10 percent less interior space than the Prius, but has the same size engine and is closer to the Prius in fuel efficiency (38 miles per gallon for the Echo; 44 mpg for the Prius).
The payback for buying the Prius over the Echo would be more than 30 years, even with the tax credit and gasoline at $4 per gallon.
Reach DuPlessis at (803) 771-8305 or jduplessis@thestate.com.
