President-elect Barack Obama plans to shift tax incentives to encourage more use of renewable energy sources, according to one tax expert.
"Both for individuals and businesses, there will a drive to promote both tax breaks and tax increases," said Chas Roy-Chowdhury, global head of taxation at the Association of Chartered Certified Accountants.
The incoming president will also go beyond tax policy to promote renewable energy. Obama pledged at the Governors' Global Crisis Summit in Beverly Hills on Tuesday evening to put limits on greenhouse gas emissions. "Now is the time to confront this once and for all," he said, according to the San Francisco Chronicle. "Delay is no longer an acceptable response. The stakes are too high, the consequences too serious."
Roy-Chowdhury, who is based in London, noted that in the U.K., as in the U.S., taxpayers can receive tax credits for buying hybrid vehicles, and he believes that Obama's initiatives will help spur the troubled auto industry to produce more fuel-efficient vehicles. "It will be more widespread from the federal government, to promote cleaner driving and greater efficiency," he said.
Energy efficiency won't only come in the form of automobiles, and he predicted that industry will be taxed more for excess pollution. "He's made it pretty clear that he's going to try to promote clean energy production," said Roy-Chowdhury. "New technology which actually ameliorates the carbon dioxide impact will probably receive tax breaks. There will be increased tax to pay if there is increased CO2 production. The old power stations will be penalized. There will be tax breaks offered to companies with alternative production systems."
The Emergency Economic Stabilization Act that Congress passed last month included a slate of tax provisions aimed at promoting renewable energy (see Tax Strategy: New Energy Tax Incentives: Now Broad Enough for Consideration). Roy-Chowdhury expects to see more legislation going through Congress next year.
"The overall economy will see more of a slant toward alternative energy tax breaks, tax breaks for efficiency and penalties for inefficiency," he said. The new system could also reflect the carbon-trading credit scheme that has already begun to emerge in Europe, or come in the form of tax credits and rebates.
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