House committee opts out of reinstating critical infrastructure financing tool
- The House Ways and Means Committee decided not to reimpose a provision eliminating the tax-exempt status of private activity bonds (PABs), a tool that public-private partnerships (P3s) often use to help fund major infrastructure projects, according to The Hill. The move rejects a Democratic amendment to the House GOP tax reform bill introduced last week.
- House Republicans said that by removing PAB tax exemptions, it would save the federal government nearly $40 billion in lost tax revenue. Around two-thirds of U.S. infrastructure projects are financed through municipal bonds, and advocates of an aggressive infrastructure program said the GOP move could impede progress on the president's $1 trillion infrastructure initiative.
- The Senate tax reform bill, released Thursday, leaves the tax-exempt status of PABs used for infrastructure untouched, according to Bloomberg, but upholds the House bill's provision that eliminates tax-free stadium bond financing.
Though stadium and infrastructure projects could take a hit from federal financing, renewable energy projects came out among winners in the Senate GOP tax bill. The wind and other renewables would see its production tax credit (PTC), worth billions of dollars, continue unchanged, Bloomberg reported.
The current PTC gives a $23 per-megawatt hour credit but is being phased down by 20% each year until it expires in 2020. However, according to Tim Maag, vice president and general manager of general contractor and real estate developer Mortenson Construction’s wind energy group, wind projects have already been planned in coordination with the phase-down. Re-categorizing those projects as far as the percentage of credit they're eligible for, he said, would put them in danger.
"In 2015, the wind industry went in front of our government and said we would accept a phase-out of the [PTC]," Maag told Construction Dive earlier this month. "In a sense, we already agreed to tax reform. Now to go backward on that — that would not be good for our industry.”
The Senate bill would also leave untouched the current $7,500 tax credit for those who purchase electric and plug-in hybrid vehicles. If the provisions of the Senate measure hold, this would be good news for electric vehicle companies, like Tesla, which benefit from the tax credit. The tax credit has been instrumental in driving up interest in electric vehicles, which have doubled their presence on the roads since 2015.
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