Hybrid tax credits a win-win situation

The credit is aimed at helping the environment and the U.S. auto industry. Last year Americans had their pick of 11 hybrid vehicles — cars and trucks that use a combination of gasoline and electric power — available in the market. This year consumers who choose one of these vehicles can take as much as $3,400 in tax credit on their purchase or lease.

The credit, part of the Energy Policy Act of 2005, is aimed at helping the environment and boosting domestic auto sales. The credit also applies to less common types of energy-efficient cars using other alternative-fuel technology. Unfortunately, the credit will be phased out for each manufacturer as they reach sales of 60,000 qualifying vehicles. This might help jump-start the auto industry temporarily and encourage consumers to buy hybrids now rather than later, but it will not encourage the long-term solutions presented by fuel-efficient cars.

Many students decide to purchase new cars when they graduate from college and begin earning regular salaries. Anything that allows them to choose an energy-efficient car should be a permanent change to the tax code, something that will continue to encourage each generation of automobile consumers to choose the most environmentally friendly option, they can afford. Because many cutting-edge technology cars are not usually the cheapest option any incentive should be a top priority.

Implementing the credit permanently also will send a strong environmental message to auto manufacturers to continue producing these efficient vehicles, as they will become increasingly popular and “cool” among consumers, especially young adults. Keeping the tax credits intact is win-win situation for the manufacturers and the environment.
The domestic manufacturers now must compete with the more-popular foreign options. The Ford Escape and Mercury Mariner still lag behind the Toyota Prius in sales, and if the new tax credit is to work, U.S. companies will be forced to come up with more in-demand and recognizable products.

In any event, now is the time for students who will soon graduate and be in the market for new vehicles to consider buying an environmentally friendly car, and they’ll save a bit when it is time to pay the Internal Revenue Service, too.

Source