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House Panel Cuts Tax Credit for Hybrids

April 4, 2003

In a setback to the auto industry's efforts to commercialize alternative power vehicles, an influential House committee April 3 gutted a plan to offer tax credits to consumers who buy environmentally friendly gas-electric hybrid vehicles, according to the Detroit News.The House Ways and Means Committee dropped the credits amid concerns about the cost of a broader energy tax package, the News reported. Chairman Bill Thomas, R-Calif., said the credits were no longer necessary because consumers would buy the hybrids on their own, without government help.If the tax credits for hybrid vehicles are not revived, it could be blow to the auto industry, the News said. Automakers argue that the tax credits are necessary to sell the fuel-sipping hybrids in large numbers. Consumers, they argue, need financial assistance to cover the costs of the hybrid technology, which can reach $3,000 or more per vehicle.The Senate Finance Committee included hybrid tax credits of up to $1,000 per vehicle in its version of the energy tax package approved on April 1. The legislation will need to be approved by the full House, the full Senate and a conference committee before becoming law.Hybrid tax credits were included in the Bush administration's budget released in February. Democrats on the Ways and Means Committee were assured by a Treasury Department official that the administration still supported the hybrid credits, Rep. Sander Levin told the Detroit News.
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