WASHINGTON - The Republican chairman of the Senate Finance Committee and the panel's ranking Democrat proposed Wednesday new tax incentives for businesses that buy vehicles that run on alternative fuels.
The proposal would cover electric cars, lean burn diesel and hybrids -- which are powered by gas-electric engines -- and vehicles that run on other sources, such as compressed natural gas. Only hybrids have gained a noticeable US market share.
Vehicles powered by ethanol and ethanol-gas blends, which US vehicle manufacturers are promoting this year, are not included. Those fuel options are covered in other tax provisions.
The Finance Committee proposal would complement certain tax breaks for small businesses that buy gasoline-only powered vehicles, such as large sport utilities.
For instance, the proposal would speed depreciation and allow businesses to expense up to $100,000 for their alternative fueled vehicles.
"The tax code shouldn't favor SUVs over alternative energy cars for business owners," said Sen. Charles Grassley, an Iowa Republican and chairman of the Finance Committee.
Montana Sen. Max Baucus, the panel's top Democrat, said Congress should do what it can to encourage the purchase and use of alternative fueled vehicles.
"America's small business owners are looking for ways to reduce their energy consumption and costs and the tax code should provide benefits for those who can choose and use clean, lean alterative fuel vehicles," Baucus said.
President Bush said in January the United States is "addicted to oil" and needed to boost investment in alternative fuels to lessen dependence on imported petroleum.
Gasoline demand accounts for roughly 40 percent of US daily oil consumption. The Natural Resources Defense Council said gas powered vehicles also account for 27 percent of US global warming pollution.
Struggling US auto manufacturers, such as Ford Motor Co. and General Motors Corp. plan to invest more in hybrid and other alternative fuel technology, but they lag behind foreign manufacturers in production of popular hybrids.
American car makers have pressed the Bush administration and Congress for tax and other incentives to facilitate research and update outmoded plants.
A Consumer Federation of America analysis this week showed that an increase of 5 miles per gallon in fuel efficiency of the US domestic fleet would save about 23 billion gallons of gasoline each year. That would reduce imports of oil and oil products by an estimated 14 percent.
Hybrids can get more than 50 miles per gallon combined city and highway driving compared with some large SUVs, which achieve between 15 mpg and 20 mpg, the CFA said.
Story by John Crawley
REUTERS NEWS SERVICE
