Tag bill passes in bipartisan Senate vote

Thursday, May 11th 2000, 12:00 am
By: News On 6

OKLAHOMA CITY (AP) -- A $22.3 million car tag reduction bill passed the Oklahoma Senate in a bipartisan vote today, a day after Republicans and Democrats clashed over its fairness in the House.

There was no debate in the Senate. Eleven of the 15 Republicans voted for the plan, three voted against it and one was absent.

On Wednesday, the measure received one Republican vote in the House, where GOP members questioned whether it was even a tax cut.

"This measure reforms the entire system so everybody is treated fairly," said House Speaker Loyd Benson, D-Frederick, who repeatedly noted it makes a car tag cost a maximum of $85.

House Republicans called it a sham that penalized used-car buyers, while giving a big break to purchasers of new vehicles. Many of them placed lemons on their desks to express their opposition.

"This is not major reform -- it's tax-shifting," said Rep. Fred Morgan, R-Oklahoma City, minority leader.

The bill now goes to GOP Gov. Frank Keating, who vetoed a Democrat-sponsored car tag reform plan a year ago. A spokesman said Keating is still studying the bill and declined comment on whether he would sign it.

In case of a veto, leaders of the Democratic majority have readied a resolution to send it to a vote of the people.

All 62 of the House's Democrats voted for House Bill 2363, while 39 of 40 Republican's opposed it. The only GOP lawmaker voting for the bill was Rep. Tony Kouba of El Reno.

Authors of the bill are Rep. Ron Kirby and Sen. Jim Maddox, Lawton Democrats.

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.

But Republicans argued that by dropping a depreciation schedule in the current system, buyers of used cars will pay more in excise taxes on purchases.

Purchasers of new cars will get a break because of the $85 limit on tag prices and the fact that the excise tax will be on thea ctual sales price and not the manufacturer's suggested price.

"We're going to increase taxes on those who can afford it the least," said Rep. Todd Hiett, R-Kellyville, sponsor of a doomed bill that would have cut car tag costs by $138 million.

"This takes from the poor and gives to the rich," said Rep. Richard Phillips, R-Warr Acres. "This is why we're going to oppose this bill and why it's going to be vetoed."

Democratic leaders said the state could not afford a tax cut of the magnitude proposed by Hiett and maintain vital services and pay for already approved pay raises for teachers and state employees.

Benson challenged Republicans to vote against the bill if they thought it was a tax increase and believed they could justify voting against a measure limiting car tag prices to $85.

"If that's the kind of position you want to be on, so be it," he said.

Hiett listed one example of where a person buying a tag for a new 1999 Cadillac would reap a $1,563 tax savings over four years, while a person buying a 1993 Chevrolet Caprice would actually pay an extra $62 over the four-year period.

Benson disagreed with those figures and the contention the bill represented a shell game.

"How can it be a shell game if everybody is paying the same 3.25 percent tax on a vehicle?" he asked.

Benson conceded, however, that tax cost on a used car will depend on the price paid for the vehicle.

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

Under the measure, a tag would cost $85 the first four years of a vehicle's life. The cost would drop to $75 from five to eight years, $55 from nine to 12 years, $35 from 13 to 16 years and $15 for vehicles 17 years old or older.

Republicans said while it is an overall tax cut, some used-car motorists would pay more because of the difference in the cost of cars and the depreciated values now used to calculate the excise tax.

They said 80 percent of Oklahomans buy used cars.

The new plan would cost $9 million the first year, $17 million the second year and $22 million the third year.

Under the bill, 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.

Kirby was among the Democrats arguing that Republicans had never documented their claims of hundreds of millions available for a tax cut.

He said it was more equitable than the current system, which "hurts everybody."