Investing in Alternative Fuel Research: Tax Breaks or Fees
Speaker Nunez's proposal to raise fees to fund research in alternative fuels and for other clean-air programs is getting the expected push-back from Republicans and tax payer groups. They would prefer tax breaks over fee increases to meet the same goals. It is a classic divide. Here is what the money would do:
The proceeds would go toward a variety of programs. For instance, private companies and universities could apply for grants and loans to research vehicle technology and alternative fuels, including ethanol and other biofuels. Also, businesses could get money to replace trucks, lawn mowers and other equipment with cleaner-burning machines.
I could see tax breaks working equally well for the second half of that, since it is basically a one for one transaction. Companies replace specific equipment and get a break from the government. The research on the other hand is a rather different calculation. A tax break structure means that companies would have to meet a certain criteria for being eligible for governmental assistance. The fee and grant/loan structure allows the government to choose the projects they want to fund. Rather than a company choosing a project that they can get the most revenue out of, the government can steer dollars towards research that brings the biggest rewards for the environment and the state. Those two sometimes match up, but not always.
The grants/loans to companies are only a piece of this bill, universities are also eligible for funding. The state could also use this fund to encourage local governments to purchase green technology, creating a demand for products. There is a lot of potential here for great returns for the state.
AB118
Auto Club of Southern California
Oct 05, 2007 12:01 ET
Auto Club Asks Governor to Veto New $1 Billion Car Tax Bill
LOS ANGELES, CA--(Marketwire - October 5, 2007) - The Automobile Club of Southern California is urging Gov. Arnold Schwarzenegger to veto Assembly Bill 118. According to the Auto Club, this legislation would violate the state constitution by unfairly and unlawfully raising taxes on motorists to fund programs unrelated to automobile use, ownership or operation.
AB118, approved by the Legislature in September, would raise vehicle registration fees by $3 and increase smog abatement fees 66% by raising the fee on newer, cleaner cars to $20 annually. AB118 would cost motorists more than $150 million each year and well over $1 billion through the life of the bill.
"If AB118 is enacted, motorists alone would bear the cost of multi-million dollar programs addressing pollution problems that they did not cause," said Steve Lenzi, the Auto Club's senior vice president for public affairs. "The bill would provide grants and loans to private enterprise, including venture capitalists, and pay to retrofit or replace engines of heavy duty trucks and lawn mowers. While these programs may be laudable, they are not responsibility of the average motorist."
According to the Auto Club, this bill directly contradicts the wishes of voters. Many of the programs in AB118 are similar to those contained in Proposition 87, decisively rejected by voters in November 2006. Now, in what the Auto Club believes is a direct slap in the face of those voters, the bill seeks to transfer taxpayer dollars to private enterprise to pay for research and development efforts that these businesses would then benefit from financially.
AB118 does have sections that would benefit motorists, including a vehicle replacement program that the Auto Club believes has the potential to reduce vehicle-related air pollution even further. But according to the Auto Club, this one program does not justify an unwieldy and inappropriate scheme to burden motorists.
"This bill is inequitable and unlawful, and we urge the governor to do the right thing and veto the bill," Lenzi said.
CONTACT:, Carol Thorp or Jeffrey Spring, (714) 885-2333
http://www.marketwire.com/mw/release.do?id=777946
Clean Air Performance Professionals
AB118
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Clean Air Performance Professionals