Car tag reform bypassed used car buyers

Monday, August 12th 2002, 12:00 am
By: News On 6

OKLAHOMA CITY (AP) _ Carroll Buxton sees anguish as much as smiles on the faces of his used car customers.

Buyers at Buxton's Auto Hut used car lot in Oklahoma City bargain for the best deal they can get, then learn that the vehicle excise tax they will pay is based on a value higher than the vehicle's sales price.

``That's not good,'' Buxton said. ``They seem to think a lot of it goes into our pockets. We've got nothing to do with it.''

Two years after voters approved a car tag reform measure that dramatically reduced car and truck registration fees, some lawmakers are calling for a new initiative to correct what they say are inequities in the state's vehicle excise tax.

``The excise tax is the area now that I feel needs to be corrected,'' said Rep. Ron Kirby, D-Lawton, whose car tag legislation was the basis for a statewide referendum approved by a 4-1 margin in August 2000.

While the ballot measure cut tag fees and reduced excise taxes on new cars, the tax bill for many used car buyers went up.

``I think any reduction should be in the area of used car purchases,'' said Rep. Todd Hiett, R-Kellyville.

``We still have used car purchasers in Oklahoma. I hear from them frequently,'' Hiett said. ``They are definitely picking up the tab for the new car purchases.''

The car tag reform measure, State Question 691, reduced Oklahomans' annual car tag costs from hundreds of dollars a year for new car owners to a maximum of $85. Fees dropped to $75 in the fifth year, $55 in the ninth year, $35 in the 13th year and $15 in the 17th year.

The measure also allowed new car buyers to pay the state's 3.25 percent excise tax on the actual purchase price instead of the artificial factory-delivered price.

The sticker price on new vehicles is often thousands of dollars more than the purchase price.

The measure had an immediate impact on vehicle registrations and tag revenue.

Figures provided by the Oklahoma Tax Commission indicate that the number of cars and trucks registered in the state rose from 2.47 million in 2000 to 2.75 million in 2001 _ an increase of almost 300,000 vehicles.

Last year, Oklahoma's 300 new car and truck dealers registered a total of 172,590 vehicles with the state, a 5.1 percent increase from the previous year, according to the National Automobile Dealers Association.

The increase was the third highest in the nation behind Arizona, which recorded a 7.4 percent increase, and Missouri, 5.9 percent, N.A.D.A said.

More than 2.6 million cars and trucks were registered in the state during the fiscal year that ended June 30, according to the Tax Commission.

Revenue from tag fees declined from $295 million in 2000 to $213 million in 2001, the Tax Commission said. Tag revenue dropped again in the 2002 fiscal year to $164 million.

``We gave Oklahomans a true tax cut,'' said Pat Hall, a former state Democratic official who headed an organization that supported the car tag reform measure.

Hall said its passage reversed a trend in which Oklahomans registered their cars and trucks in other states where tags cost less.

``We made honest tag payers out of over 100,000 vehicle owners,'' Hall said.

But the measure hit used car buyers by eliminating guidelines that depreciated a car's value for excise tax purposes by about 30 percent a year.

Instead, used car buyers must pay excise tax on the value of their vehicle as listed in the Official Used Car Guide, the so-called ``Blue Book'' published by N.A.D.A.

``The excise tax actually increases on some of the older vehicles,'' said Paula Ross, spokeswoman for the Tax Commission.

The result has been a steady increase in excise tax revenue to the state.

Revenue was more than $198 million in 2000 and rose to $248 million in 2001, according to the commission. Excise tax revenue increased again in the 2002 fiscal year to $266 million, Ross said.

The change in excise tax rules has created problems for used car dealers and their customers, said Danny Dewberry, sales manager and Bob Moore Jeep Chrysler Plymouth in Oklahoma City.

``I really think they're totally uneducated on the fact of what they're going to have to pay,'' Dewberry said.

``Dealers have had to be very creative to try to help their customers,'' said Steve Rankin, president of the Oklahoma Auto Dealers Association.

In some cases, excise taxes are financed with the price of the vehicle to make it affordable for used car buyers, Rankin said.

``In 30 days they're going to have to play some music with the tag agent. It's not fair,'' Dewberry said.

Buxton, the Oklahoma City used car dealer, said the state can recalculate the purchase price of a vehicle for excise tax purposes if a tag agent believes the price listed on the title is not enough.

``That's happened to me two or three times,'' he said. ``It's not good. But that's politics.''

State lawmakers said it will take a political effort to provide relief to used car buyers.

Hiett said he favors either cutting the excise tax rate or restoring the depreciation schedule for used car buyers, who have increased nationwide over the past decade.

Used car sales rose from 24.5 percent of all vehicle sales in 1991 to 29 percent in 2001, according to N.A.D.A.

``It's kind of like the inheritance tax. It's an onerous tax,'' Kirby said. ``People see a need for a tax that is fair and equitable.''