CLEAN FUEL SALES TAX EXEMPTION
Description: Washington exempts sales tax (RCW 82.08.809) on the sale of new passenger cars, light duty trucks, and medium duty passenger vehicles, which are exclusively powered by a clean alternative fuel. This exemption expires July 1, 2015. We would like it extended to July 1, 2020.
Why This Should Be Supported: The sales of electric vehicles are just now ramping up, and the sales tax exemption is a good incentive to consumers to purchase or lease an electric vehicle. Sales of electric vehicles still need to continue strong for a number of more years before they become more accepted by consumers.
Options:
- Change the exemption to include electric motorcycles, E-Scooters and E-Bikes (and other zero emission vehicles).
- Add a sunset clause based on zero emission vehicles reaching 10% of all registered vehicles in Washington.
- Extend current law to 2020 but phase out the sales exemption over that time period (i.e. 2015 – 100%, 2016 – 80%, 2017 – 60%, 2018 – 40%, 2019 – 20%, July 1 2020 – 0%).
Estimated State Costs:
Costs based on WA Department of Licensing Purchase Cost Amount and the State Sales Tax rate of 6.5%.
Recent Legislative Actions: HB 2671 and SB 6496 attempted to amend this law in 2014 to include vehicles that use auxiliary sources of power to regenerate a battery such as the BMW i3 with REX option or Chevrolet Volt. The legislation didn’t make it out of committee. There was no fiscal impact for HB 2671/SB 6496. House Representatives sponsoring this bill included: Magendanz, Carlyle, Manweller, Fey, Warnick, Sawyer, Morris, Gregerson, Hansen, Condotta, Muri, Tharinger, Morrell, Wylie, Haler, Fitzgibbon, S. Hunt, Tarleton, Freeman, Ortiz-Self, and Moscoso. Senators Holmquist Newbry sponsored it in the Senate.
“Vehicles directly powered by clean alternative fuel are exempt from sales and use tax. The “direct power” source of a vehicle provides power to the vehicle’s drive train. A drive train is the system of components that transfer power to the wheels of the vehicle. Vehicles with an auxiliary source of power used to regenerate a battery that acts as a direct source of power to a drive train are eligible for the exemption.
“Directly powered” means the direct source of power to a vehicle’s drive train. “Directly powered” does not include auxiliary sources of power used to regenerate a battery that acts as a direct source of power to a drive train.”
[This seems to imply that the volt is included because it uses a generator that doesn’t actually connect to the drive train whereas the prius would not be exempt because its engine directly connects to the drive train.]