DC Tax Break for Hybrid Cars May Be Changed

The District of Columbia is considering removing the tax break they offer on hybrid cars, but only for the hybrid vehicles on the low end of the efficiency scale. This sort of thinking could be bad news for GM, which carries the hybrid Tahoe and GMC Yukon Hybrid. These SUV hybrids may raise their city fuel economy by 50% using hybrid technology, but that means they are still getting just over 20 mpg.

Currently, DC offersa the six percent break excise tax for anyone who buys a hybrid vehicle, regardless of their size. But they are considering making the benefit available only to any new vehicles getting 40 mpg or better in city driving. Currently, that means the rule would only apply to the Honda Civic hybrid, Toyota Prius and Volkswagen Jetta TD.

It would eliminate the benefit for the already mention GM vehicle, plus any hybrid from Lexus, the Toyota Camry Hybrid and Nissan Altima Hybrid and the other hybrid cars that just aren't as efficient.

But really, the considered change reflects DC officials thoughts on 1) the strength of the hybrid car marketplace and 2) the 'dilution' by these larger hybrids.

While I understand why they would consider this ruling, I'm not sure I support the incentive for it. Hybrid technology can make a big difference in the SUV market. And while I would encourage anyone to buy the smallest/most fuel efficient car they need, sometimes people do need larger vehicles. And by improving your fuel efficiency at the lower end of the spectrum, you may be doing more than someone who improves their fuel efficiency at the higher end.

For instance, by going from 15 mpg to 20 mpg, and you travel 12,000 miles a year, you will save 200 gallons a year. By going from 35 to 40 mpg, you only save 43 gallons.

Perhaps they should consider the average fuel efficiency via car size, then apply the rule. That way, you may eliminate the mild hybrids from the mix, while still keeping the incentive for better fuel efficiency.