The Inflation Reduction Act of 2022, passed the Senate on Aug. 9, 2022. Inside the $430 billion bill promoting deficit reduction and climate change, is an increase in your gas taxes.
With gas averaging more than $4.00 per gallon across the country, and only weeks removed from record-high prices of $5.00 a gallon, this act includes a 16.4 cents-per-barrel tax on crude oil and imported petroleum products that will be passed on to consumers in the form of higher gas prices.
PETROLEUM VITAL WORLDWIDE
The tax hike will affect you — even if you own an EV. Everything we buy will get more expensive. Petroleum is used for a massive percentage of all production in the world, regardless of industry. Plus moving all those products in diesel-powered trucks, planes, and boats will become more expensive. That cost increase will be passed on to you.
For those of you who own electric cars, the energy industry is going to get a $1.2 billion coal tax, which will be passed down to all consumers in electricity fees as well. The bill would more than double current excise taxes on coal production.
Automakers are saying that this Senate bill will jeopardize 2030 EV targets. Unfortunately, the EV tax credit requirements will make most vehicles immediately ineligible for the incentive.
A group representing General Motors, Toyota, Volkswagen, and other major automakers said a $430 billion bill approved Sunday by the U.S. Senate will put achieving U.S. electric-vehicle adoption targets for 2030 in jeopardy.
The Alliance for Automotive Innovation's chief executive, John Bozzella, added that the bill "will also jeopardize our collective target of 40-50% electric vehicle sales by 2030."
ELIMINATES $7,000 EV TAX CREDIT
Here are the facts. The group had warned Friday that most EV models would not qualify for a $7,500 tax credit for U.S. buyers under the bill. To be eligible for the credit, vehicles must be assembled in North America, which would make some current electric vehicles ineligible as soon as the bill takes effect.
The Senate bill imposes other restrictions to deter automakers from using Chinese-made materials by phasing in required percentages of North American-sourced battery components. After 2023, vehicles with batteries that have Chinese components could not receive the credit, while critical minerals also face limitations on sourcing.
The issue is that the seven rare earth minerals are not mined in North America. While plentiful, they damage the environment. These include: cadmium, cobalt, lead, mercury, lithium, nickel, and neodymium. The U.S. is almost totally reliant on China for rare earth metals, as the mining of these mineral is dangerous and hazardous to the environment.
The U.S. Congress passed new EV tax credits, which would expire in 2032 and would be limited to trucks, vans and SUVs priced no more than $80,000 and cars up to $55,000. Families with adjusted gross incomes of up to $300,000 would be eligible.
The bill creates a $4,000 tax credit for used EVs. The package provides billions in new funding for EV production as well as $3 billion for the U.S. Postal Service to buy EVs and battery-charging equipment. Although the used car market is inflated these days, an electric vehicle typically depreciates at a faster rate than a gasoline equivalent, and battery life issues can lead to a large battery replacement bill.
This does not help working class families! The new taxes on gas and electricity will cost every driver about $2,400 more per year, every year.
THE BOTTOM LINE
As with most legislation, the long-term effects of the Inflation Reduction Act are not known.
However, this reaction has already happened: The US Congress passed new $7,500 tax credit for electric cars, including pickup trucks. The next day Ford increased the price of F-150 Lightning by $8,000. The US taxpayer should expect prices to increase to cover the new taxes going forward.
There is so much more to discuss on this, put your comments below and let’s start the conversation.
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