The Car and Truck Fleet and Leasing Management Magazine

AFV Tax Breaks Won’t Help Government Fleets

March 31, 2003

Potential tax breaks for fleets that purchase alternative-fuel vehicles (AFVs) would have little impact on government fleets seeking to take advantage of the proposed legislation. Sen. Orrin Hatch (R-UT) and Rep. Dave Camp (R-MI) recently announced the introduction of the new Clean and Efficient Automobiles Resulting from Advance Car Technologies Act 2003 (CLEAR ACT), a measure that provides incentives and base credits for buyers of low-emission vehicles. The legislation promotes government agencies purchasing low-emission vehicles by transferring the credits to the seller of the vehicle, if the value of the credit is disclosed at the time of sale. Theoretically this could reduce the pur-chase price of these vehicles when all or part of the credit is factored into the final sales price. However, the National Association of Fleet Administrators (NAFA) and the National Automobile Dealers Association (NADA) say this is a flawed approach and are discussing possible changes with congressional members. Under the CLEAR ACT, incentives are provided in accordance with fuel economy performance. Fuel-cell vehicles garner a $4,000 base credit along with an additional $4,000, depending on the vehicle’s fuel economy. Similar incentives and credits are available for hybrid vehicles, dedicated alternative-fuel vehicles, and medium-and heavy-duty vehicles that have the same technologies as passenger vehicles. The act also includes incentives for the installation costs of alternative-fuel sites (up to $30,000 and a $100,000 tax deduction extended over 10 years). The plan offers credit of $0.50 for every gallon of gas equivalent to the retail distributor. Ethanol is not included in these provisions, due to the existing credit of $0.82 per gallon equivalent.
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