Wednesday, October 3, 2007

Virginia's Energy Sales Tax Holiday: Not Such a Bright Idea

Allow me to do some Malcolm Gladwell-style consumer psychology: Why doesn't the Maytag Repairman ever tell you washers are on sale?

Because people don't buy appliances like they buy other products. Unlike that car you might be persuaded to trade-in for a newer model because of a cash-back offer or that morning cup of coffee you might be swayed to get at Krispy Kreme because of a discounted donut, you buy new appliances when the old ones break.

Think about it. Have you ever been in Sears and said, "I like the washer we have, but dang it, this sale is too good to pass up. I'm throwing out our perfectly good current one." Sure, there are sales to try to sway you from one brand to the other, but they're not designed to get you to want to buy an appliance in the first place. That's why Maytag preaches brand reliability -- whenever you do need a new dishwasher, they'll be there.

So why would you throw out your perfectly-good refrigerator just because Virginia has declared an EnergyStar Sales Tax Holiday October 5-8? If Virginia is really interested in promoting energy efficiency, shouldn't it offer an incentive that will be there whenever your old fridge kicks the bucket?

But, as the Virginian-Pilot detailed back in February, "it gets worse":
What home appliance uses the most energy? The furnace. What appliance is completely excluded from [Del. John] Cosgrove's bill? The furnace. (Isn't it curious that the furnace is the most expensive home appliance most people will ever buy, and excluding it from the sales tax would actually cut into state revenue?)

And still it gets worse. Cosgrove has so inartfully worded his legislation, that you don't even have to buy the most energy-efficient "Energy Star" appliances to get the tax break, you just have to buy appliances that meet "energy-saving efficiency requirements."

Well guess what? You can't buy or sell new air conditioners or water heaters that don't meet Environmental Protection Agency and Department of Energy efficiency standards. Thus, all new appliances qualify for the tax break.

In short, the Chesapeake Republican has written a tax break that almost nobody will get, that doesn't apply to the largest energy hog in your house and doesn't actually encourage people to buy the most energy-efficient appliances. There's a word for that: worthless.

Thanks to Lowell from RK for passing along the governor's release, and thanks to Vivian for first catching the editorial back in February.

Cross-posted (mostly) from
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