Tax Breaks For CNG Conversions, Fleets Under Consideration In Ohio
Ohio lawmakers are seeking to provide tax credits and sales tax breaks for buying or converting vehicles for alternative fuels such as natural gas. The House Finance and Appropriations Committee held the first hearing of the year for House Bill 336, which would also create a Gaseous Fuel Vehicle Conversion Program that would provide grants for vehicle conversions. If passed, the bill could be a boon for alternative fuels such as compressed natural gas, which are increasingly used in commercial-vehicle fleets but whose conversion remains expensive for commuters.
However, potential revenue losses could arise from the bill. The Gaseous Fuel Vehicle Conversion Program would include a fund run by the state EPA, which would use the money to make grants to eligible entities that can use natural gas in fleets, such as state agencies and schools. The fund would have $16 million for five years.
The idea is to lower costs for organizations to acquire vehicles for their fleets using CNG, liquefied natural gas or liquid petroleum gas, fuels that are typically more environmentally friendly than existing fuels and are generally cheaper and less likely to be imported.
The bill also provides an alternative fuel vehicle tax credit for the purchase or conversion of an alternative fuel vehicle via the personal income tax or commercial activity tax. The credit would be available for vehicles purchased or converted within five years of the bill’s passage. The bill would allow a savings of up to $500 in sales tax on the purchase or lease of an electric vehicle as well, which would reduce state sales tax revenue by about $1.2 million annually, and would phase in the motor fuel tax rate for CNG throughout five years.
H.B. 336 has bipartisan support from more than 60 co-sponsors. Six proponents testified in support, including Chuck Diehl, Fleet Manager of Smith Dairy Trucking, Ohio’s biggest family-owned independent dairy. Diehl testified that changing his fleet to CNG is underway, and the company has built a public CNG station.