The Legislature has left town and we can now assess the damage from this year’s session.
With the adoption of their HB 2433, Oklahoma’s politicians voted to put a new sales tax on the purchase of new and used cars.
Vehicle purchases are already taxed with the excise tax. The excise tax is an “in lieu of” tax that replaces the sales tax. Legislators took the incredible and nearly unprecedented step of putting a sales tax on vehicle purchases without replacing the in lieu of tax. This means that there are now two taxes on cars: the first, an in lieu of tax known as the excise tax; the second is the sales tax which will now apply, notwithstanding the fact that the excise tax already applies and will continue to do so.
Keep in mind that Oklahomans already pay some of if not the highest annual vehicle registration fees in the nation.
It’s a punitive proposal that lawmakers hope will take over $110 million away from Oklahoma car buyers.
It is also an illegal proposal in my view, because it did not have enough votes in the Legislature to comply with the important provision that requires a supermajority (75%) of legislative votes for revenue raisers.
Lawmakers are daring the courts to throw out this illegal law. Doing so would create a 110 million dollar budget hole and some legislators appear to believe that the court will get the blame instead of the Legislature.
I think the people of Oklahoma are much too intelligent for this ruse and they will appreciate the courts for saving them from the illegal new tax.
Like House Bill 2433, Senate Bill 845 is also very dangerous in that it is clearly unconstitutional and will likely create a massive hole in the state budget, once it is rejected by the courts.
Throughout the session, legislators attempted to pass a cigarette tax. They were never able to get the constitutionally required constitutional supermajority in both Houses. This new tax would have placed Oklahoma’s rate so much higher than surrounding states that it would have potentially driven millions of dollars to other states with much lower tax rates.
This means that Oklahoma would likely receive much less revenue than projected. That’s a big problem because the fictional “projected” new revenue stream would have likely been dedicated to health care funding, while a corresponding amount of “actual” revenues would have likely been directed away from health care funding and into general revenue.
This would naturally create a budget hole in the health care funding as soon as the next fiscal year.
Instead of reacting to these concerns, legislative leaders remained stubbornly committed to the idea of a massive tax increase. In the last week of session, in clear defiance of the Constitution, they renamed the tax to a “fee” and passed it in the form of Senate Bill 845, without the constitutionally required supermajority vote.
I believe almost every legislator will admit off the record that this blatant disregard of the Constitution will be stopped by the courts. But they are counting on the public to blame the courts for the 218 million dollar budget shortfall that will ensue.
As bad as the ensuing 218 million budget hole might seem, it will pale in comparison to the great harm that will prevail if the court does not throw out the bill. If the Legislature gets away with reclassifying this tax into a fee, they can duplicate this abuse time and time again.
Freed from the constraints of the Constitution, next year’s Legislature will have carte blanche to increase any and every tax that they desire as they struggle to cope with the budget deficit that will be carried forward from this year’s budget.
Passing the buck to the court, failing to write a legitimately balanced budget, and punitively taxing Oklahomans instead of reducing spending is a complete abandonment of the Legislature’s responsibilities.
Next week I will detail more of the new taxes levied by the Legislature this year.