Volume 152, No. 73 covering the 2nd Session of the 109th Congress (2005 - 2006) was published by the Congressional Record.
The Congressional Record is a unique source of public documentation. It started in 1873, documenting nearly all the major and minor policies being discussed and debated.
“INTRODUCTION OF ``NO SPECIAL TAX SUBSIDIES FOR GAS GUZZLERS ACT''” mentioning the Environmental Protection Agency was published in the Extensions of Remarks section on pages E1104-E1105 on June 9, 2006.
The publication is reproduced in full below:
INTRODUCTION OF ``NO SPECIAL TAX SUBSIDIES FOR GAS GUZZLERS ACT''
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HON. EDWARD J. MARKEY
of massachusetts
in the house of representatives
Friday, June 9, 2006
Mr. MARKEY. Mr. Speaker, today I am joined by Reps. Anna Eshoo, Raul Grijalva, Barbara Lee, Pete Stark, Jim Oberstar, Bernie Sanders, Sam Farr, Lois Capps, Jim McGovern, Betty McCollum, Bill Delahunt, Jay Inslee, John Olver and Jim Moran in introducing a bill entitled, ``No Special Tax Subsidies for Gas Guzzlers Act.'' With our budget deficit running at near record levels the federal tax incentives, it seems odd that we would find it fiscally responsible to provide incentives to purchase automobiles which are especially inefficient. In fact, this runs directly contrary to other public policy initiatives, such as the fuel economy standards and the gas guzzler tax, which were adopted to try to keep the fleet of cars on the road from using more gasoline than is necessary. Now that we have troops in the Middle East, these odd, counter-productive incentives can also be viewed as directly undermining our need to break the national addiction to imported oil.
This legislation corrects two incentives which are out-of-step with the times--the SUV Tax Loophole and the Gas Guzzler Tax loophole.
Some estimate suggest that if we reform either of these perverse incentives so that SUVs receive the same tax treatment as they would if they were classified as passenger vehicles, the savings would be at least $1 billion over 10 years.
The federal tax code affects the purchase of heavy-duty SUVs through preferential tax treatment of depreciation for motor vehicles and passenger cars. Recently, the Congressional Research Service reviewed this situation and concluded that for a hypothetical purchase made in 2005, a businessman would realize a much higher after tax return on investment by purchasing an SUV instead of a similarly priced passenger car--$3,000 higher in the example given. ``In this treatment lies the most important tax subsidy for the purchase of these SUVs for business use.'' (``Tax Preferences for Sport Utility Vehicles,'' Guenther, Gary, Congressional Research Service, (RL32173), April 4, 2006, p. 5.) The report notes that ``there is no question that current depreciation rules favor the purchase of heavy-duty SUVs over lighter SUVs or passenger cars of comparable value. Supporting evidence can be found in the greater tax benefit to business taxpayers from buying an SUV exempt from the depreciation caps on luxury passenger cars than from buying a vehicle subject to those caps. This added benefit stems from the accelerated depreciation for heavy-duty SUVs available under IRC section 179.'' Ibid, p. 11.
The Report goes on to note that when Congress moved in 2004 to reduce the expensing allowance for SUVs from $100,000 to $25,000, it may have thought it was significantly reducing the tax tilt to SUVs, but in fact
``it did little to curtail the tax preference for buying these vehicles under current depreciation rules.'' Ibid, p. 13.
The legislation we are introducing today will eliminate the tax tilt so that a businessman is not led to buy the heavier vehicle by virtue of a perverse tax incentive. There may be other reasons to buy the larger vehicle, but a tax preference should not be one of them.
Cars which consume excessive quantities of gas are subject to a `gas guzzler' tax which is intended to encourage automakers to produce and develop more fuel efficient vehicles. This tax has been highly effective. During the model year (MY) 2003, fewer than 100,000 (or 1.3%) of cars purchased were gas guzzlers. However, the tax is only subject to passenger vehicles, which means that SUV's escape the gas guzzler tax entirely!
This bill would incorporate SUV's into the gas guzzler tax schedule that applies to other passenger vehicles.
The gas guzzler tax originated with the Energy Tax Act of 1978 (P.L. 95-618), and the IRS issued the first regulations to implement it in 1980. It applies to domestic sales of automobiles by manufacturers and importers, who are required to pay the tax. IRC section 4064(b) defines an automobile as any ``four-wheeled vehicle propelled by fuel which is manufactured primarily for use on public streets, roads, and highways.'' Until the passage of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU, P.L. 109-59) in August 2005, the definition of automobiles also stipulated that such vehicles have an unloaded gross vehicle weight of 6,000 pounds or less; the act repealed this weight limitation, subjecting all vehicles meeting the remaining criteria for an automobile to the tax, irrespective of their weight. Certain vehicles are exempt from the tax: namely, emergency vehicles such as ambulances and police cars, cars with a gas mileage rating of 22.5 miles per gallon (mpg) and over, and all ``light trucks'' including SUVs of all weights. Whether a gas guzzler tax is owed--and if so, the amount of the tax--depends on an automobile's combined city and highway fuel economy rating, which is defined as the average number of miles traveled by an automobile per gallon of gasoline as determined by the Environmental Protection Agency. The current tax ranges from $1,000 for cars with a fuel economy rating of at least 21.5 miles per gallon but less than 22.5 miles per gallon to $7,700 for cars with a rating of less than 12.5 miles per gallon. These amounts have been in effect since the enactment of the Omnibus Budget Reconciliation Act of 1990 (P.L. 101-
508). In FY2004, the tax raised $141 million in revenue, up from $71 million in FY2000.
Again, the Congressional Research Service analyzed the SUV exemption from the gas guzzler tax, noting that by exempting SUVs, demand for heavy-duty SUVs is likely to be greater than it would be if they were subject to the tax and buyers were forced to bear its burden. Since most heavy-duty SUVs get relatively low gas mileage, retail prices could be as much as $4,500 to $7,700 higher for many models if current law were changed to subject them to the tax and importers, manufacturers, and dealers were to pass the full amount of the tax on to buyers.
In applying the gas guzzler tax to SUVs, the legislation makes certain exceptions for vehicles clearly intended for carrying heavy loads, pick up trucks with open beds, and so forth.
For years we have stood idly by while watching our energy dependence soar as consumers responded to these perverse loopholes and upside-down tax incentives. The health of our environment and the safety of those purchasing small vehicles is affected adversely by giving preferences to inefficient SUVs. While we complain that China is now affecting demand for world oil, we continue to tolerate a tax code which artificially skews in favor of the purchase of the least efficient vehicles.
We no longer have the luxury of ignoring this ridiculous situation. Please join us in supporting efforts to reform this self-inflicted source of wasted gasoline and oil.
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