BILL NUMBER: SB 1782 CHAPTERED
BILL TEXT
CHAPTER 888
FILED WITH SECRETARY OF STATE SEPTEMBER 28, 1998
APPROVED BY GOVERNOR SEPTEMBER 26, 1998
PASSED THE SENATE AUGUST 19, 1998
PASSED THE ASSEMBLY AUGUST 17, 1998
AMENDED IN ASSEMBLY AUGUST 13, 1998
AMENDED IN SENATE APRIL 14, 1998
AMENDED IN SENATE MARCH 26, 1998
INTRODUCED BY Senators Thompson, Peace, and Rosenthal
(Coauthor: Assembly Members Alquist, Baugh, Bowen, Brown,
Campbell, Cardenas, Firestone, Keeley, Knox, Kuehl, Leonard, Machado,
Mazzoni, Ortiz, Scott, Strom-Martin, and Thomson)
FEBRUARY 18, 1998
An act to add and repeal Section 10759.5 of the Revenue and
Taxation Code, relating to taxation, to take effect immediately, tax
levy.
LEGISLATIVE COUNSEL'S DIGEST
SB 1782, M. Thompson. Taxation: vehicle license fees:
low-emission vehicles.
The Vehicle License Fee Law provides that the annual amount of the
license fee for any vehicle is 2% of the market value of the
vehicle, as specified. It provides for the determination of the
market value of any vehicle, for reclassification to increase the
market value of a vehicle, and for the exemption of certain vehicles
from the imposition of the license fee.
This bill would, until January 1, 2003, for purposes of
determining the vehicle license fee, exempt from the determination of
market value, the incremental costs, as defined, that are incurred
with respect to a new light-duty motor vehicle propelled by an
alternative fuel that is certified by the State Air Resources Board
as producing emissions that meet, or are lower than, the emission
standards and other specifications for ultra-low-emission vehicles,
as defined by the board.
This bill would make certain legislative findings and declarations
regarding vehicle emissions.
This bill would take effect immediately as a tax levy.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares:
(a) There is a wide disparity on some state and local taxes and
fees levied on owners of vehicles operated on alternative fuels when
compared to those same taxes and fees levied on owners of comparable
conventional fuel vehicles.
(b) In some cases, the taxes and fees on alternative fuel vehicles
are more than twice as much as those for conventional fuel vehicles.
(c) The disparity in taxes and fees exists even though the
alternative fuel vehicle may look identical to the conventional fuel
vehicle and provide the same or lesser utility to the individual
owner.
(d) The existing California vehicle license fee and state and
local sales and use taxes on the sale or lease of motor vehicles that
operate on alternative fuels are higher than for comparable
conventional fuel vehicles because alternative fuel vehicles
generally have higher sales prices. The higher sales prices are
largely due to the fact that these vehicles are produced in extremely
low volumes (many assembled by hand), such that their production has
not achieved the economies of scale that would significantly reduce
their cost; and they use many new advanced materials and technologies
that also have not yet achieved economies of scale, and therefore
have a temporarily greater cost to consumers.
(e) The higher sales prices for these alternative fuel vehicles
are expected to be a short-term, temporary situation because prices
are expected to decline significantly to competitive levels as volume
increases. If this does not occur, these vehicles may never be
competitive, and automakers would likely withdraw them from the
market. The current vehicle license fee mechanism, and sales and use
tax system, do not reflect these temporary, short-term pricing
situations. Instead they intrinsically, but incorrectly, assume that
these short-term higher prices reflect true long-term market value
of the vehicles.
(f) Alternative fuel vehicles provide benefits to California
citizens that are external to, or not reflected in, their cost to the
purchaser. These benefits include: increasing our national
independence from foreign energy sources; providing more
transportation choices for consumers and businesses, thus reducing
our economic vulnerability to sudden fuel price increases caused by
external or internal events; reducing air pollution from mobile
sources; reducing future pressures for additional environmental
controls on existing and new businesses and industries in California;
and creating new advanced transportation technology jobs and
industries in California.
(g) It is the public policy of the State of California, the
federal government, and many local governments, to encourage the
development and use of alternative fuel vehicles, for the purpose of
providing the benefits described above to all California citizens.
(h) Existing vehicle license fee structures, and the existing
sales and use tax system, as they relate to the determination of
market value of alternative fuel vehicles do not reflect the critical
short-term pricing issues described above, nor the external benefits
that accrue to all California citizens. Additionally, these
existing fees and taxes act as a significant disincentive to
potential purchasers of alternative fuel vehicles, and as such, are
contrary to existing public policies at all levels of government.
(i) It is the intent of the Legislature to equalize the vehicle
license fee, and state and local sales and use taxes, between
alternative fuel vehicles and conventional fuel vehicles for a period
of four years, beginning January 1, 1999, and ending December 31,
2002. During this time period it is the intent of the Legislature
that the incremental or differential cost between an alternative fuel
vehicle and a comparable conventional fuel vehicle, as determined by
the State Energy Resources Conservation and Development Commission,
should be exempt from both the vehicle license fee, and state and
local sales and use taxes.
(j) To ensure that the alternative fuel vehicles subject to these
provisions provide significant reduction in air pollution, eligible
vehicles must meet, at a minimum, the standard for ultra-low-emission
vehicles as determined by the State Air Resources Board.
SEC. 2. Section 10759.5 is added to the Revenue and Taxation Code,
to read:
10759.5. (a) For purposes of determining the vehicle license fee
imposed by this part, there are exempted from the determination of
market value, the incremental costs of new light-duty motor vehicles
propelled by alternative fuels, and certified by the State Air
Resources Board as producing emissions that meet the emission
standard for ultra-low-emission vehicles or lower as defined by the
board. This exemption shall apply to the subsequent payments of the
vehicle license fee.
(b) For purposes of this section, "incremental cost" means the
amount determined by the State Energy Resources Conservation and
Development Commission as the reasonable difference between the cost
of the motor vehicle defined in subdivision (a) and the cost of a
comparable gasoline or diesel fuel vehicle. This determination shall
constitute the maximum incremental cost for purposes of the
exemption in subdivision (a), and may be reduced by the actual sales
price of the vehicle. The actual incremental cost shall be stated in
the contract for sale or lease with the purchaser, and shall be
reported to the commission quarterly.
(c) This section shall become operative on January 1, 1999, and
shall remain in effect only until January 1, 2003, and as of that
date is repealed.
SEC. 3. This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.