President Barack Obama is determined to make cars in the U.S. as clean as possible. After reaching an agreement with major manufacturers about the 54.5 mpg CAFE target set for 2025, he now plans to increase the federal income tax credit for alternative fuel-powered cars.
The proposal, which is included in the 2013 budget, raises the maximum credit by as much as US$2,500 for certain plug-in models. Currently, the maximum tax credit is US$7,500.
Under the provision, vehicles with a MSRP of US$45,000 and above would received up to US$7,500, while models below that price would be eligible for the full US$10,000 credit.
To qualify for the rebate, any vehicle will have “to operate primarily on an alternative to petroleum” and meet certain mpg.e (miles per gallon equivalent) targets.
Replying to criticism that the proposal favors electric vehicles, director of the National Economic council and president’s assistant for economic policy Gene Sperling said: “We don’t pick between natural gas and electric vehicles. We’ll let the market determine that and give consumers the incentive to buy these cars.”
The increase in tax credit will be available until 2016. The incentives will then be lowered by US$2,500 each year until 2020, when the plan ends. Moreover, in contrast to the current practice, the credit will not be claimed by the buyers, but by the seller who may lower the car’s sticker price to make it more attractive.
Story References: NY Times
