Hybrid Tax Credits Spur Detroit Versus International Debate

Washington DC December 18, 2006; The AIADA newsletter reported that "with the return to power of Michigan's congressional Democrats – who will head three key committees and have significant say over the agenda on Capitol Hill – lawmakers are expected to revive several proposals aimed at helping the domestic industry," reports The Detroit Free Press.

Meanwhile, the International auto industry is working to be seen as an equal player in the U.S. economy and asking lawmakers not to tailor benefits for Detroit at their expense. According to Freep, just how much political support foreign companies yield on Capitol Hill will be tested early on as debate brews between Japanese and U.S. automakers over expanding consumer incentives for hybrid vehicles.

Association of International Automobile Manufacturers (AIAM) President Mike Stanton said his group would be "vigilant" against tax credits that favored or disadvantaged one part of the U.S. industry. "Our position will be that if there are going to be tax credits, they ought to be equitably applied and everyone should be able to qualify for them," he said. "It doesn't make a lot of sense to put a tax credit on an old plant and not put one on a new plant that's built for the same purpose."

Under a law passed in 2005, consumers receive tax credits of up to $2,600 for buying a hybrid, but the credit phases out once an automaker sells 60,000 vehicles that qualify for the incentive. Toyota's tax credits began phasing-out earlier this year, which North American chief Jim Press has said led to a decrease in hybrid demand.

Last week, the Energy Security Leadership Council, a group of corporate chiefs and retired military officers said to survive scrutiny from the World Trade Organization, the credit would have to be offered to any automaker with a U.S. plant.