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Tag bill passes in bipartisan Senate vote

Updated:
OKLAHOMA CITY (AP) -- In contrast to a noisy bipartisan fight in the state House, the $22.3 million car tag reduction bill zipped to final approval in the Senate on Thursday with only a whimper of GOP opposition.

The measure was sent to Republican Gov. Frank Keating on a 42-3 vote. Eleven of the 15 Republicans present voted for the bill, which sets the maximum tag fee at $85. Three voted against it and one was absent.

There was no debate in the Senate.

Afterward, House Speaker Loyd Benson, D-Frederick, said Senate Republicans had sent Keating a "pretty good signal" that he should sign the bill.

Benson said he is confident Keating will decide the bill is much better than the current system and a veto would be difficult to
defend.

"It looks like Oklahoma motorists are going to get the tag relief that they deserve," added Sen. Jim Maddox, D-Lawton, Senate sponsor. "They've been stuck with a bad system for a long time, but if we get our way, the nightmare that is the Oklahoma tag system will finally end."

On Wednesday, the measure received only one Republican vote in the House. Thirty-nine Republicans voted against it and questioned
whether it was even a tax cut.

The bill changes the way the 3.5 percent excise tax is assessed.

In the future, the tax will apply to the actual price of a vehicle, not the sticker price set by the manufacturer.

In the case of used cars, the bill exempts a portion of the sales price from the excise tax.

But opponents said most used car buyers will still have to pay more in excise taxes because the bill eliminates a current provision that rapidly depreciates a car's value over a number of years.

They said it will take at least three years of buying cheaper tags before many used car buyers see any advantage from reduction
in tag costs.

The bill creates a tiered system of flat tag fees, with annual costs depending on the age of the vehicle.

A tag would cost $85 for vehicles up to 4 years old, $75 for vehicles 5 to 8 years old, $55 for vehicles 9 to 12 years old, $35 for vehicles 13 to 16 years old and $15 for vehicles 17 years or
older.

Benson said the strength of the bill is that it "treats everybody the same" on excise taxes and eliminates an unfair provision basing taxes on sticker prices instead of what is
actually paid for a vehicle.

"The system is fraught with unevenness," he said. "This smoothes out the system."

He predicted that because of the bill, "people will be coming into Oklahoma and buying their new and used cars and taking them
back to Texas and Arkansas." Critics of the current system say Oklahoma has lost millions of dollars in tag revenue because of
motorists buying cheaper tags in other states.

A year ago, Keating vetoed a Democrat-sponsored car tag reform plan that had no fiscal impact.

Proponents noted this year's bill contains a phased in $22.3 million tax cut, costing the treasury $9 million the first year. It would take effect on Sept. 1.

Keating proposed a tax cut of $68 million this year, eventually reaching $138 million.

Democrats argued that was not wise, in view of needs in education, nor possible, in view of a budget that tightened up after the Legislature enacted, and Keating signed, a $167 million teacher pay raise and a $40 million state worker pay increase.

A major difference in the bill Keating vetoed and the current measure is that it does not replace the current 3.25 percent excise tax with a 4.5 percent sales tax.

Some Democrats have conceded the excise tax may be higher than it is currently on the purchase price of some used vehicles. But
they said much of that will be made up the first year in lower tag costs, with savings coming in future years.

Maddox noted the bill protects funding for education and road building by requiring that the lost revenue come out of the state's
General Revenue Fund.

The bill, introduced by Rep. Ron Kirby, D-Lawton, doubles the cost of this year's earlier version of the Kirby-Maddox bill, which had been set at $11 million.

Under the measure, which would go into effect Sept. 1, used-car purchasers would pay a flat fee of $20 on the first $1,000 value of
a vehicle's sales price and the regular 3.25 percent excise tax on the balance of the price.

The second year of the bill, the $20 fee would apply to the first $1,250 of a vehicle's sales price. It would apply to the first $1,500 the third year.
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On the Net: http://www.lsb.state.ok.us


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