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HB 516 - Alternative fuel vehicles sales tax reduction

HB 516 - Alternative fuel vehicles sales tax reduction

Phil Haunschild
February 16, 2018

Bill description: HB 516 would reduce the sales tax on the purchase of a new alternative-fuels vehicle (natural gas, propane, electricity, etc.) from six to three percent. This reduction would sunset in 2023

Rating: -1

Does it increase government redistribution of wealth? Conversely, does it decrease government redistribution of wealth? 

In Idaho, a sales tax must be paid when a new vehicle is bought. (Upon the resale of a vehicle, the sales tax is not collected). HB 516 would exempt alternative-fuel vehicles from paying 50 percent of the sales tax on the original purchase, bringing the total sales tax to three percent of the total purchase price, down from six percent for all other goods. This reduction would sunset in 2023.

By reducing the sales tax for this select category of vehicles, HB 516 would unfairly benefit this industry and the individuals using these cars at the expense of others. HB 516’s Statement of Purpose notes, the bill’s purpose is to encourage more drivers to use vehicles with alternative fuel sources and to encourage more manufacturers to deliver such vehicles to Idaho. The subsidization of this industry would primarily benefit wealthy Idahoans and vehicle manufacturersthe costs for these vehicles with alternative energy sources exceeds the average cost of vehicles using standard fuels, and the sales tax exemption only applies to the sale of new alternative-fuel cars. Since only the highly expensive vehicles would qualify, these purchases would be out of reach to many Idahoans.


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