GOP-Controlled House Votes to Impose State Sales Tax on Vehicle Purchases

Staff Writer

The Republican-controlled Oklahoma House of Representatives passed a measure Wednesday that would repeal the long-standing state sales-tax exemption on purchases of motor vehicles.

If House Bill 2433 is endorsed by the Senate, too, and is signed by the Governor, sales of all motor vehicles, new and used alike, would be subject to not only the 3.25% vehicle excise tax but also a state sales tax of 1.25%, making the total of the two levies 4.5%.

Oklahoma Tax Commission (OTC) records show that HB 2433 would have a bigger impact on working-class families than on upper-income buyers.

One reason is because lower- and middle-income families devote more of their disposable income to auto/truck purchases than do wealthy Oklahomans. Moreover, OTC data show that lower-priced vehicles constituted four of every five motor vehicle title transactions that were logged in calendar year 2016.

The OTC recorded 692,495 motor vehicle title transactions last year. Of that number:

Ÿ 577,324 of those transactions (83.36% of them) involved vehicles that had a taxable value of up to $30,000.

Ÿ 85,016 of the transactions (12.27% of them) occurred on vehicles that had a taxable value of $30,001 to $50,000.

Ÿ 24,800 of the transactions (3.58% of them) involved vehicles that had a taxable value of $50,001 to $100K.

Ÿ The remaining 5,355 transactions (0.77% of them) occurred on vehicles with taxable values that ranged from $100,001 to more than $200K.

HB 2433 would generate an estimated $111 million in revenue for the state’s General Revenue Fund, the HB 1017 Education Reform Revolving Fund, and the Oklahoma Teachers’ Retirement System, the OTC estimates.

House Democrats expressed reservations about HB 2433 for three reasons:

§ Article V, Section 33-D of the Oklahoma Constitution mandates (in accordance with State Question 640, which Oklahoma voters approved in 1992) that for any revenue bill to become law, it must be approved by three-fourths of the membership of the House of Representatives (76 of 101) and of the Senate (36 of 48) or be referred to a statewide vote of the people.

House Majority Floor Leader Jon Echols, R-Oklahoma City, insisted that HB 2433 is not a revenue-raising measure in the strictest sense, because it simply repeals a sales-tax exemption.

Any assertion that HB 2433 is not a tax increase is “ludicrous,” Rep. Forrest Bennett argued during House floor debate Wednesday. “We wouldn’t be doing this if we weren’t in a $900 million shortfall,” the Oklahoma City Democrat asserted.

“We are increasing taxes and raising revenue to balance the budget,” echoed Rep. Emily Virgin, D-Norman, in debate against the bill.

§ Article V, Section 33-B of the Oklahoma Constitution decrees, “No revenue bill shall be passed during the five last days of the session.” This year’s annual regular session must conclude by 5 p.m. Friday, May 26, in compliance with Article V, Section 26 of the state Constitution.

Again, House Republicans contend that HB 2433 is not a tax increase. One claimed it is merely “balancing out the tax code.”

§ Sales taxes authorized by HB 2433 on motor vehicle sales could not be assessed by cities and counties, many of which are strapped for cash, noted Rep. Shane Stone, D-Oklahoma City. “[T]he sale of motor vehicles shall not be subject to any sales and use taxes levied by cities, counties or other jurisdictions of the state,” the bill stipulates.

House Bill 2433 passed the House on a vote of 52-47. Every vote in favor of the proposal was cast by Republicans; the measure was opposed by all 26 House Democrats and 21 Republicans.


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