The U.S. Congress is mulling new legislation that would eliminate certain tax incentives and exemptions that make consumers more likely to buy SUVs. Representative Edward J. Markey (D-MA) has issued a report titled “Tipping the Scales,” which focuses on two policies that favor the purchase of heavy SUVs. The first is the exemption of SUVs light trucks and minivans from the Gas Guzzler Tax which is imposed on cars rated below 22.5 miles per gallon. The second is the special tax depreciation tax preference that businesses can take for buying an SUV instead of a car or station wagon.
“Not only are these incentives contrary to good energy policy, they are costing American taxpayers billions each year,” said Markey. “It is incredible that the Bush Administration and Republican Congress can be so blind as to leave these tax loopholes in place while our dependence on Middle East oil soars, the price of gasoline spikes, and our soldiers are mired a war in the Middle East.”
The tax bias in favor of an SUV can be quite substantial, according to the report. It compares, for example, the hypothetical purchase of an Audi station wagon versus a Jeep SUV. The purchase of the 20.5 mpg Audi incurs a $1300 gas guzzler tax; the purchase of the less efficient 15.8 mpg Jeep is gas-guzzler-tax free. Similarly, a 21.7 mpg Chrysler 300 C, a large sedan, pays a gas guzzler tax of $1000, but the 13.9 mpg GMC Yukon Sierra, a very large SUV, pays no tax.
“This makes no sense,” Markey said. “Congress is using the tax code to generate artificial demand for inefficient vehicles in the automobile marketplace. Regardless of whether we ever ramp up and modernize the minimum fuel economy standards, providing these out-of-date tax incentives that reward the purchase of inefficient vehicles just make things worse.”
Markey introduced The No Special Subsidies for Gas Guzzlers Act (H.R. 5579) to eliminate both forms of tax discrimination.
