The base erosion tax in the Senate version of the Tax Cuts and Jobs Act would hurt, unless amended, wind and solar investments in the US and damage tax equity markets, renewable energy groups warn.
In a joint letter to the US Senate on Wednesday, the American Council on Renewable Energy (ACORE), American Wind Energy Association (AWEA), Solar Energy Industries Association (SEIA) and Citizens for Responsible Energy Solutions are calling for an amendment to exempt the production and investment tax credits (PTC and ITC) from the calculation of the Base Erosion Anti-Abuse Tax (BEAT). They explain that tax credits for renewable energy would face a new 100% tax for multi-national companies covered under the BEAT provisions.
“Not surprisingly, major financial institutions have indicated that, under such a regime, they would no longer participate in tax equity financing, the principle mechanism for monetizing credits,” says the letter, sent on behalf of investors, developers, manufacturers, and corporate energy consumers.
The BEAT provisions are retroactive and would apply also to tax credits generated by operational power plants. The energy groups expect companies holding tax credits to try and dispose of them immediately, flooding the marketplace and hurting additionally tax equity markets.
The purpose of the BEAT is to support investment and jobs in the US, but ACORE and the other associations warn that in the case of renewables the effect would be opposite.