Bring back consumer energy tax credits

On Dec. 31, 2007, the consumer tax credits for energy-efficiency home and building improvements authorized by the Energy Policy Act of 2005 expired.

There is no question that today's economy is in peril. Both consumers and small businesses are feeling the financial squeeze. In an effort to stimulate the economy and provide relief to consumers, earlier this year, Congress passed an economic stimulus package meant to provide a “shot” to the floundering economy. However, the p-h-c industry feels there was a large component absent from the most recent economic stimulus.

On Dec. 31, 2007, the consumer tax credits for energy-efficiency home and building improvements authorized by the Energy Policy Act of 2005 expired. In order for consumers to receive this tax credit, all qualifying products must have been purchased and installed by that date. During the debate and subsequent passage of the Economic Stimulus package, some in Congress worked hard to include an extension of the energy-efficiency tax incentives for homeowners and building owners who make energy efficient upgrades to their HVAC systems. However, due to the delicate nature of the compromise reached by Democrats and Republicans in Congress and the White House, the proposal to include the extension of the energy efficiency tax incentives was something that wasn't even considered.

This is a bit perplexing to those of us in the industry. The extension of these tax credits is a proposal that enjoyed bi-partisan support and, more importantly, would put money back into the hands of American consumers. The energy efficiency tax incentives also would stimulate the economy by encouraging the purchase of energy-efficient products and services. This is an important component considering that in the fourth quarter of 2007 the Commerce Department reported that gross domestic product barely grew. Furthermore, this initiative could provide much needed relief to American consumers by helping to lower their monthly energy bills, which are estimated to average roughly $2,200 this year.

Here are brief summaries of the tax credits that PHCC supports and would like reinstated:

  • A homeowners' tax credit (up to $500) provides incentives for consumers for installing energy-efficient furnaces, windows, exterior doors, metal roofs and insulation to make their homes more efficient; the credit is also available for the installation of energy-efficient furnaces, boilers, central air conditioners, heat pumps or water heaters.

  • A new tax deduction for homebuilders that erect new homes that exceed the national model energy code by 50% (subject to certification) and to producers of manufactured homes that exceed a national model building code by 30% or that meet Energy Star standards.

  • A commercial buildings tax deduction for owners or tenants that make energy efficient improvements to new or renovated commercial buildings that cut by at least half the annual heating, air conditioning, ventilation, water heating, and interior lighting costs that meet the national ASHRAE Standard 90.1-2001.

  • A set of appliance manufacturer tax credits to encourage production of very high-efficiency appliances such as clothes washers, dishwashers, and refrigerators (so-called “white goods”).

The American Council for an Energy-Efficient Economy has estimated that enactment of these provisions could result in a reduction of 97 million metric tons of carbon and $22 billion in net savings on energy costs cumulatively through the year 2030.

At press time, the reinstatement of these tax credits has only been proposed to Congress as a potential, but no formal legislation has been introduced. PHCC is hopeful that such legislation will occur in the coming months. By restoring these tax credits, Congress would take an important step toward providing American consumers and businesses with economic incentives for becoming more energy efficient. PHCC plans to work with our industry partners to urge Congress to move forward with this important initiative.

Jessica Johnson Bennett is Director of Government Relations for the Plumbing-Heating-Cooling Contractors — National Association. She can be reached at [email protected].