Plug-in cars charge up at the Washington State Capitol Campus. A disproportionately high number of the state's legislators drive electric vehicles compared to the general population. CREDIT: TOM BANSE

Electric Car Tax Break Could Disappear In The Northwest

By Tom Banse March 6, 2018

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If you’re thinking about buying an electric car in Washington , you might want to act fast. That’s because the state Legislature is on the verge of letting a hefty sales tax break expire. In Oregon, an electric car rebate faces a challenge in court next week.

If you buy or lease a qualifying plug-in vehicle in Washington state, you pay no sales tax on the first $32,000. That tax break is set to expire at the end of June. But auto makers and climate protection activists are pleading at the Legislature for an extension.

Becky Bogard lobbies for General Motors, maker of the plug-in Volt and Bolt models. She spoke in favor of extending the sales tax exemption to mid-2021 at a hurried state Senate Transportation Committee meeting Saturday.

“We have found that incentives are the number one reason why people buy these,” Bogard said. “You have to get used to a new technology and you need something to make them try it. This is a particularly important incentive at this time because we are seeing some of the federal incentives go away.”

The hang up at the Washington Legislature is how to pay for the tax break. Time is rapidly running out on this year’s session, which is scheduled to wrap up on Thursday.

Meanwhile in Salem, the Oregon Supreme Court is scheduled to hear oral arguments next week on the legality of a new tax on automobile sales. This tax, approved by the Oregon Legislature last summer, was supposed to generate money for electric car rebates.

A state agency is accepting rebate applications now from people who buy battery-powered cars, but no checks will go out unless the Oregon high court upholds the funding source.

Since January 1 of this year, Oregon drivers who buy or lease electric cars theoretically qualify for cash rebates up to $2,500 on vehicles with an MSRP under $50,000. But the Oregon Department of Environmental Quality is warning car shoppers the rebates are delayed and not guaranteed.

“We’re probably looking at late summer before any (rebate) checks go out,” said industry trade group director Jeff Allen, assuming a favorable verdict from the state Supreme Court. Allen runs Forth, formerly known as Drive Oregon.

Allen said his group and other electric vehicle advocates have not given up on the Washington sales incentives yet. He said a short-term extension might still be achievable.

“It’s going down to the wire in the session” in Olympia, Allen said in an interview Monday.

“We think the incentives are still really important. If we’re serious about hitting our goals—for clean air, climate and things—these need to continue for a few more years,” he said.

The Washington state sales tax exemption nets a tax savings between $2,600 to $3,100 for electric car buyers depending on where their dealer is located in Washington. The sales tax varies slightly from county to county.

The sales tax exemption also applies to monthly payments on newly-executed leases. All this is limited to fully electric and plug-in electric cars whose base model sticker price is less than $42,500, a caveat designed to exclude luxury car buyers from benefiting.

A bipartisan bill sponsored by state Rep. Jake Fey, D-Tacoma, to extend the electric vehicle tax exemption to June 30, 2021, and remove an earlier phase-out cap passed the state House on a vote of 86-12. But the measure failed to attract sufficient support in the state Senate to even move out of committee.

Senate Transportation Committee Chair Steve Hobbs indicated Saturday that the issue was not with the tax incentive itself, but rather heartburn over how to backfill the roughly $2.5 million to $4 million per year in foregone sales tax revenue.

A range of environmental group lobbyists condemned the version of the bill approved by the Washington House, which would pay for the tax break from a state fund that gives grants for transit, bicycle, pedestrian and special needs transportation projects.

“We don’t see a net benefit in terms of air quality and climate improvements under this bill,” Sierra Club lobbyist Bruce Wishart said.”This bill robs Peter to pay Paul.”