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Bill would expand hybrid tax credits

Ford Debuts New Ford Escape Hybrid
Owners of gas-electric vehicles like this Ford Escape Hybrid would benefit from a proposed increase in tax credits.Matthew Cavanaugh / Getty Images file
/ Source: staff and news service reports

Buyers of gas-electric hybrid cars and other fuel efficient vehicles could receive bigger tax breaks under legislation reintroduced in Congress this week.

Rep. Dave Camp, a Michigan Republican, proposed a bill that would offer tax credits of between $600 and $4,000 per vehicle, depending on the model and the energy-saving technology used.

President Bush also supports the incentives, providing for them in his 2006 budget proposal. Democrats and environmentalists welcome the idea as well, saying its a practical way to transition to a cleaner and less oil-dependent future.

The current one-time federal tax deduction of $1,000 for a hybrid car or truck drops to $500 next year and will be phased out in 2007. Some states also offer tax incentives for hybrid vehicles.

Legislation similar to Camp’s plan cleared the House of Representatives last session as part of a broad-based energy bill that fell one vote short of passage in the Senate.

While energy saving gas-electric hybrid vehicles are becoming more popular with the public and more are being made, they are not a mass-market product or a profit maker for manufacturers.

Operating with an electric motor and a gasoline engine and getting up to 60 miles per gallon in some cases, hybrids usually sell for $3,000 dollars more than comparable gasoline-only cars and trucks.

Other technologies covered by Camp’s bill, which was endorsed by auto manufacturers, include leaner burning diesel fuel and fuel cells, which are still in the testing phase.

Bush is proposing extending the credit through 2008. The president would also make a credit of up to $8,000 available for the purchase of fuel cell vehicles between 2005-2012.

Fuel cell vehicles are still to expensive to sell to the public, and only General Motors has said it would try to commercialize the technology within the next decade.