House approves hybrid tax breaks

Tuesday, March 11, 2008

JEFFERSON CITY, Mo. — Missourians who want to buy hybrid vehicles could get a tax break under legislation given preliminary approval Monday.

But the tax incentives could be used only for hybrids that are manufactured in the United States. That limitation was approved after Democrats criticized the bill for about an hour, saying it would use state money to encourage people to buy foreign vehicles.

The tax breaks would allow Missourians who buy a hybrid vehicle to deduct from their taxable income that year $2,000 or 10 percent of the vehicle's price, whichever is lower. Several models of hybrid vehicles cost about $20,000. The tax break would start this tax year.

Sponsoring Rep. David Sater said the incentive is designed to spur Missourians to drive more environmentally friendly vehicles.

According to an estimate by legislative researchers, the tax break would cost the state about $500,000 in its first year and increase to more than $840,000 by 2010.

The incentives would run out in six years.

Rep. Gina Walsh was one of several St. Louis-area Democrats who called for the ban on using the tax breaks for foreign cars. She said job outsourcing has hurt the state's economy and has made it harder to find well-paying manufacturing and other blue collar jobs.

"If a baker bakes a loaf of bread and he can't even afford to buy his own product, we've got a problem," said Walsh, D-St. Louis.

A Department of Economic Development study in 2006 showed Missouri's vehicle plants employed 16,000 workers, created an additional 54,000 jobs, paid $236 million in state taxes and accounted for almost 3 percent of the state economy.

Although Republicans eventually voted for the amendment excluding foreign vehicles from the tax break, several lawmakers said restricting how it could be used would make the incentive less effective by reducing participation.

The measure needs another vote before moving to the Senate.


Hybrid tax incentive is HB1326.

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