US Senate fails to pass legislation for renewable energy tax incentives leaving uncertainty in the business community

By Tom Routley

Burlington, ON, August 4, 2008-On Wednesday, July 30th, for the fourth time this summer, the US Senate has failed to pass legislation extending all the renewable energy tax incentives - including solar credits, wind credits, commercial building deduction - and now it looks like the entire business community will have to endure continued uncertainty until after the August recess.

It is partisan politics that grinds everything to a halt despite the apparent majority support by both Democrats and Republicans for these tax incentives. The Republicans shut down this attempt with a vote nine short of the required 60 for several reasons. First, these renewable energy extenders are now caught up in the whole energy crisis currently engulfing Washington - intertwined with Republican demands for expansion of the domestic oil drilling footprint and curbs on excessive speculation in the petroleum futures market. Secondly, the Republicans objected to the Democrats strategy to pay for the renewable energy extenders with increases in tax in other areas within the same bill. And finally, it is becoming evident that anything that does not bring relief at the gas pumps will not be a priority.

The business community will be left to float in a sea of uncertainty throughout the August recess. We all know what happens to investment decisions made in the face of uncertainty at the best of times, and Congress has made sure that these are not the best of times.

In light of this stall and the upcoming federal US elections, the best course of action is to take advantage of incentives like the commercial building deduction while you still can.

Tom Routley is a Chartered Accountant with an undergraduate degree in engineering. He has over 25 years of extensive experience in both the Canadian & US income tax rules related to energy tax incentives, tax-efficient financing and R&D tax incentives. He works at Energy Advantage Inc as an independent consultant with a focus on tax incentives.