Buzzword: Fee-bate
A combination of the words fee and rebate, a fee-bate is a market incentive based on exempting some buyers from a fee imposed on others as a “sin tax” for buying certain products. In some cases, the fee is actually paid to buyers who make particular buying choices, such as purchasing an energy-efficient product.
That’s essentially the idea behind the Efficient Vehicle Leadership Act, a bill introduced in the Senate today by Jeff Bingaman (D-NM) and Olympia Snowe (R-ME). The bill would levy an additional tax on automakers for cars they produce that get lower than the required average fuel economy required for their class. The bill would eventually replace other existing taxes and incentives such as the Hybrid Tax Credit and the Gas Guzzler Tax.
Rebates and fees would be based on how much better or worse fuel economy a particular model gets compared with the average required for its class.
For example, small conventional cars with good fuel economy such as the Ford Focus or Honda Civic would receive a $1,000 rebate, while the Ford Escape hybrid would receive $2,500. The Toyota Prius, which gets the best fuel economy of any production car currently sold in the United States, would get a $4,000 rebate. On the other hand, the Hummer H2 would be subject to a fee of $2,500.
The rebates would begin in 2011 and the fees would be phased in starting in 2013, under the bill.
