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Republican introduces new bill to end the $7,500 federal tax credit for electric cars and tax them more instead

At a time when most governments are looking at ways to encourage electric vehicle adoption, a Republican senator has now introduced a new bill to end the $7,500 federal tax credit for electric cars and instead tax them more.

Senator John Barrasso, a Republican from Wyoming, introduced the bill this week.

The full text of the bill is not available yet on Congress’ website, but the goal is clear from its title:

“A bill to amend the Internal Revenue Code of 1986 to terminate the credit for new qualified plug-in electric drive motor vehicles and to provide for a Federal Highway user fee on alternative fuel vehicles.”

The effort comes at an interesting time for the electric vehicle federal tax credit.

It’s the second year in a row that the GOP has tried to repeal the $7,500 federal tax credit for electric vehicles. The last attempt wasn’t part of a much bigger bill and it was dropped from the final version.

Last quarter, Tesla became the first automaker to hit the 200,000 delivery threshold to initiate a phase-out period of the credit over the next year.

At the same time, a new bill in Congress is attempting to remove the delivery limit for the federal tax credit and replace it with a time limit.

The logic is that the delivery limit results in a disadvantage to early proponents of the technology, like Tesla, and will create a competitive advantage for other automakers who have been late to introduce EVs in volume.

But the bill is backed by Democrats in a Congress and Senate controlled by Republicans, which makes this new bill introduced by Barrasso much more likely to pass.

“Oil and gas” is one of the top sectors to donate to Barrasso’s campaign, according to OpenSecrets. Chevron and Murray Energy are amongst Barrasso’s top donors.

The bill has now been referred to the Committee on Finance. We will monitor its progress.

Electrek’s Take

This is sad. I don’t like this way of incentivizing  EV sales. I’d much prefer for the government to properly tax gas-powered vehicles to represent their impact on the environment and the health of the population.

But in the absence of that, the federal tax credit for electric vehicles is the best solution we have for now and they want to remove it?

I think it’s shameful.

Hopefully, it fails like it did last year, but I think it’s a completely different situation since the last attempt was used as part of a negotiation tactic in a much bigger bill.

This one is a standalone bill. Hopefully, enough Republicans see that it is a stupid idea and block it, but I’m not well-versed enough in American politics to have a valuable opinion on its chances of passing.

What do you guys think? Let us know in the comment section below.

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