U.S. Legislative Issues

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Senate Committee to Investigate Volkswagen’s Clean-Car Tax Breaks

In a recent letter sent to Volkswagen (VW) CEO Matthias Muller and VW’s top U.S. executive, Michael Horn, Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) are demanding VW answer questions about tax credits for cars that are among the 482,000 diesel vehicles that had "defeat devices" installed in them to allow emissions up to 40 times the allowable pollution limit in real-world driving.

In 2005, Congress created the Alternative Motor Vehicle Credit that allowed buyers to get a tax break on the first 60,000 qualifying vehicles sold by a manufacturer. The 2009 Jetta TDI Sedan and SportWagen qualified for $1,300 in tax credits per vehicle — vehicles that Volkswagen (VW) has admitted used the defeat device — along with other 2010 models that were approved for the credit. Sales figures suggest that over $50 million in tax subsidies went to purchasers of these vehicles.

"The vehicles in which Volkswagen installed ‘defeat devices’ included those that the company certified as qualifying for the advanced lean-burn technology motor vehicle credit. While investigations are ongoing, the Volkswagen Supervisory Board has confirmed that the company installed ‘defeat devices’ on as many as eleven million vehicles marketed as model years 2009 through 2015. This activity raises questions of whether Volkswagen made false representations to the U.S. government in its certification for federal tax subsidies," Senators Hatch and Wyden wrote in their letter.

The Committee set a deadline of October 30, 2015 for VW to respond to the inquiry.



Authorization for highway and transit program funding is set to expire on October 29, 2015.  Earlier this year, the Senate passed a six-year bill which contained only three years of funding. The House had hoped to act on a long-term bill funded by changes in the international tax code, such as repatriation of corporate income earned abroad. However, revenue negotiations between the House and Senate have faltered, spurring the House Transportation & Infrastructure (T&I) Committee to proceed with a bill that identifies other "pay-for’s." A handful of T&I members and staff have suggested a House Committee markup of the legislation could occur as early as the week of October 19, but an official date has yet to be announced.  

Due to the limited number of legislative days remaining until the October 29 deadline, and given the Department of Transportation's recent announcement that the Highway Trust Fund would be solvent until the summer of 2016, it is likely that Congress will pass another extension for surface transportation programs while the House and Senate continue to seek common ground on a long-term bill.



Last year, data from the National Highway Traffic Safety Administration (NHTSA) indicated that America's highway fatality rate had dropped to its lowest point in history. Due to improvements in the economy and lower gas prices, however, recent figures indicate that the U.S. is now on pace for the deadliest driving year since 2007. Given this, increased efforts are being made to prevent crashes and promote life-saving technologies. According to a recent NHTSA study, new vehicle safety technologies – from seatbelts to electronic stability control – have saved more than 614,000 lives. U.S. Transportation Secretary Anthony Foxx cautions, however, that vehicle safety features only work if drivers know how to use them.

Deborah Hersman, CEO of the National Safety Council (NSC), termed the 30,000 deaths on the roads each year "a public-health crisis," making vehicle safety technologies essential to helping prevent the human errors that cause ninety percent of those fatalities. "A lot of these technologies are transferable," Hersman said. "They’re not just designed for passenger cars. Some of them have even broader application in commercial vehicles. We want consumers and we want professional drivers to know what’s in their vehicles." New crash avoidance technologies can help, but a recent NSC study found most drivers are uncertain about the technologies and how they work. Forty percent of drivers reported their cars had acted in ways that startled or surprised them.

In light of this, the U.S. Department of Transportation (DOT) and the NSC are partnering together to highlight vehicle safety technologies, such as automatic emergency braking systems, blind spot monitors and lane departure systems, in a new educational campaign unveiled on October 7, 2015. The campaign’s official website, MyCarDoesWhat.org, has video demonstrations and public service announcements designed to raise awareness of the technologies.

"As we advance future technologies that could change the game for safety, we also need to make sure drivers know how to use safety features that are already available," Foxx said. "Current safety features cannot save lives unless drivers use them, which is why ‘MyCarDoesWhat’ promises to both educate drivers and save thousands of lives every year."
 

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