Vehicle companies and clean fuel advocates have mobilized in favor of a bill that would grant tax incentives for the manufacturing of electric vehicles (EVs).
Senate Bill 257 would create a $500 sales tax credit for the purchase of an EV for personal use and a $1,000 sales tax credit per vehicle for up to 10 EVs purchased for commercial use.
An analysis from the Legislative Service Commission (LSC) concluded the tax credit could result in a loss of between $1.7 million and $2.4 million in sales tax revenue to the state during both the 2021 and 2022 fiscal years. Future revenue losses depend on how many EVs are purchased, the LSC said.
“Although Ohio’s credit is a modest $500, we believe it will spur economic activity,” Brian O’Connell, regional director, state government affairs for General Motors, told members of the Senate Ways and Means Committee considering the bill.
“Every year, cars and trucks account for one-fifth of the U.S. carbon emissions,” O’Connell said. “With vehicles that are more fuel-efficient than ever, and with electric vehicles becoming more affordable, we can help our customers save money and reduce the carbon footprint.”
The measure, sponsored by state Sens. Sean O’Brien, D-Bazetta, and Michael Rulli, R-Salem, would also establish a $1,500 tax credit for the construction of either commercial or personal EV charging stations. The tax credits are designed as a temporary action aiming to jump-start the EV industry in the Buckeye State, the sponsor previously said.
“These much-needed tax incentives will encourage Ohioans to consider purchasing these vehicles and embrace the new, cleaner, more advanced technology that is an electric vehicle,” Tyler Fehrman, a representative of Clean Fuels Ohio, told lawmakers.
“By passing this bill and incentivizing the purchase of electric vehicles both by individuals and businesses alike, we will take the first steps to making this advanced technology more accessible to Ohioans, and make the market in Ohio more attractive to companies looking for a place to bring their business,” Fehrman added.
Outside of Ohio, 14 states offer some level of electric vehicle incentives, including rebates and state income tax credits, O’Connell said. If approved, the tax credit could also have ramifications for local governments.
Both the Local Government Fund and the Public Library Fund for local jurisdictions across Ohio could see a loss of $100,000 per year for 2020 and 2021, according to the LSC review. Meanwhile, county and transit authorities could see revenues drop by up to $500,000 per year in 2020 and 2021.
The bill could also have ramifications for personal income tax (PIT) and commercial activity tax (CAT), the LSC review found.
Several other companies and organizations, including Ford Motor Company and AEP Ohio, submitted written testimony in favor of the bill.