Spring 2000: The Jolly Green Tax Credit
(Tax links are here if you want to skip the story.)
By now you are probably wondering when, or if, I cashed in on any electric-vehicle tax credit. Well, I did.
Nothing from Uncle Sam—there is (I hear) a federal tax incentive for electric cars, but apparently doesn’t apply to vehicles that don’t have at least four wheels. Discrimination!
But from the state of Arizona… well, that has turned out to be a different story. For tax year 1999, they decreed that the tax credit for a ZEV (Zero Emissions Vehicle) was $10,000 or half the purchase price of the vehicle, whichever was more. Yes, more! I ran out to my wife with the tax form. “Am I reading this wrong?” I asked her. She read it the same.
Of course, Arizona won’t give you back more money than you actually owe in tax. What with two kids, a mortgage, and charitable contributions, my tax liability was only $1600 in 1999. The good news is that the credit can be carried forward for five years. The result for me is no state taxes for several years.
Moreover, in Arizona, ZEVs also qualify for a $5 VLT, or Vehicle License Tax. Isn’t that nice? When I first bought the Lectra, I expected to get this particular VLT rate, but the guy waiting on me at DMV got all dim and confused and said that it didn’t apply to golf carts or motorcycles. Well, this year I went and checked the ACTUAL LAW, thank you anyway, and yes, I do qualify. The law (ARS 28-5805) says, in so many words, that if it’s registered for operation on highways and is powered by an alternative fuel source (electricity is specifically mentioned), then it qualifies. So I did get the low VLT this year.
Regarding my incorrect VLT from 1999: the lady at DMV said that since I’d waited a whole year, it would be difficult to get it back. She did give me an address to write to. I didn’t bother, though.
It’s true that the Lectra, with a top speed of 51 mph, barely qualifies for operations on highways. But it does qualify. And I’ve put over 3,000 miles on it in the first year I’ve owned it, commuting and running errands. That’s 3,000 miles that my carbon-monoxide-producing car did not run. So not only does the Lectra satisfy the letter of the law, I believe my purchase of and use of the Lectra is what the spirit of the law intended as well.
However, when people hear about this, their reaction is first shock, and then a certain kind of disapproval. “Why,” said one, “I should buy a Lectra and then toss it in the landfill, just to get the tax credit!” I suppose he’s welcome to do that. He hasn’t yet. Another one was offended that it was a tax credit. “It’s just for rich people, then,” he said, meaning that if you don’t owe much state tax already, the credit doesn’t help. That may also be true, but it’s not without precedent. After all, the tax deduction for mortgage interest favors homeowners, and favors owners of steeper mortgages.
I have heard a rumor that Arizona is going to change the nature of the tax credit to be $10,000 or half the purchase price, whichever is less (rather than more), by June of 2000. That’s fair, but I still think that the present credit is appropriate. Arizona has both Tucson and Phoenix in it, and Phoenix is the poster child for urban sprawl. There is a great deal of traffic in Phoenix, and Tucson is right behind it (in Arizona). Arizona should spend some money on the encouragement of electric vehicles. If that means overly generous rewards for early adopters of electric vehicles, then so be it. We’re having to put up with other inconveniences in exchange, like no electric vehicle infrastructure, and steeper prices for the vehicles themselves.
As many of you may be aware, this extremely generous change in the Arizona tax code resulted in quite a scandal, as the total revenue required for this credit grew to half a billion dollars. This was because the law was written too loosely. For example, someone could buy a gasoline/CNG hybrid but never use the CNG part of the vehicle and still get credit for it. Or, they could buy the vehicle in Arizona and then immediately sell it to someone else.
As a result, Gov. Jane Hull and the legislature put a moratorium on the credit and are presently rewriting the law to be tighter. I’m not too concerned for myself—after all, I’m meeting the spirit of the law. I’ve got a fully electric vehicle that won’t take gas at all, and I use it daily to commute to work instead of a gasoline-powered vehicle.
Nevertheless, alternative-fuel vehicles got a black eye in Arizona as a result of this particular scandal, and I fear that the repercussions may actually make it more difficult for electric vehicles here than it was before.
Forms and Stuff
I used Form 313, Alternative Fuel Vehicle Credit. Here are the instructions that Arizona provides with it. Note that the previous two links are for tax year 1999. If you need the most up-to-date forms, you should visit the Arizona Department of Revenue.
For the exact text of the law regarding which vehicles qualify for this credit and the $5 VLT, see the Arizona Revised Statutes. The relevant statute in this case is ARS 28-5805.
Read on to see how I handled leaking battery acid.