The Senate Finance Committee voted yesterday to double the existing tax credit for installation of residential solar energy equipment and extend it to cover adjoining buildings and vacation homes as well.
The proposal, approved by unanimous vote, would increase the present credit to 50 percent of the first $10,000 that a homeowner spends on solar energy equipment, for a maximum tax reduction of $5,000.
Under current law, the credit now stands at 30 percent of the first $2,000 that the homeowner spends and 20 percent of the next $8,000, for a maximum of $2,200. The existing solar credit was enacted last year.
The measure was proposed by Sen. Bob Packwood (R-Ore.) as part of a larger solar package that also would have boosted the present tax credit for home insulation and provided tax breaks to industry as well.
However, in a pang of conscience over the cost of the tax breaks it is approving, the committee backed away from supporting Packwood's proposal intact, and decided instead to limit its action to tax credits affecting residences.
The Finance Committee has approved several billion dollars worth of tax credits as part of President Carter's proposed windfall profits tax bill, but so far has not tackled the question of how much, if any, to tax the oil companies.
On Tuesday, the panel approved legislation that would provide up to $2.5 billion a year in tax credits by 1990 to spur production of unconventional fuels, such as oil shale and coal made from gas.
Packwood's original proposal would have cost $3.2 billion in 1980 and another $7 billion a year by 1985. In 1980, the tax credits the committee has voted so far would almost outstrip the new revenues from the House windfall profits tax.
Finance Committee Chariman Russell B. Long (D-La.) finally implored members that unless the panel mends its ways it will find it has spent far more than the windfall profits tax would raise.
The Finance Committee is expected to water down the House version of the windfall bill. The committee already has voted to exempt heavy California crude oil from the tax, and its expected to approve other exceptions as well.
The Packwood proposal has been greeted lukewarmly by the Carter administration, which has a rival plan for a solar energy tax credit, now before the House Ways and Means Committee.
Energy tax credits have proved controversial in recent years. Enactment of the existing credit for installation of home insulation spurred purchases so much that it created a shortage, sending retail prices soaring.
The only dissent on the panel came from Sen. John Chafee (R-R.I.), who noted at one point that the energy cost savings alone might be reward enough for homeowners who install solar energy equipment, and that a tax break might not be necessary.
Besides increasing the tax credit for solar energy equipment, and extending it beyond the homeowners' principal residence, the proposal also would make solar, wind and geothermal tax credits available to builders who use the equipment in construction of new homes.