OKLAHOMA CITY – A measure that would repeal the 1.25% sales tax on motor vehicle purchases was filed in the state Legislature last week. The legislation would leave intact the 3.25% excise tax paid on vehicle purchases.
“We’ve effectively been double taxing Oklahomans who buy a motor vehicle,” said Rep. Justin Humphrey (R-Lane), author of House Bill 1015XX.
Five years ago, during the teacher walkout, legislators raised what was determined at the time to be a fee on the purchase of motor vehicles in order to help pay for a teacher pay raise, Humphrey said.
The Legislature passed a measure in 2018, during Humphrey’s first year in the House, that instituted a 1.25% sales tax on motor vehicle purchases in addition to the existing 3.25% excise tax already assessed, bringing the total rate to 4.5%.
“Now we’re showing state coffers are flush with cash and teachers have had several pay raises,” he said. Many Oklahomans, including Gov. Stitt, “are calling for a way to lower taxes and relieve inflation for Oklahomans,” Humphrey said. “Removing this regressive tax is one way to accomplish that goal.”
At least part of the reason the state is “flush with cash” is because of the Biden administration’s American Rescue Plan Act. ARPA earmarked $1.87 billion in federal funding that enabled the State of Oklahoma to replace revenue lost due to the coronavirus pandemic and to make necessary investments in water, sewer and broadband infrastructure.
The tax loss to the state treasury if Humphrey’s measure becomes law is unknown because the House Fiscal Division has not yet performed a fiscal impact assessment on the measure. Speaker Charles McCall assigned the bill to the House Committee on Appropriations and Budget.
The second special session of the 59th Legislature convened on Oct. 3. However, the Senate adjourned sine die later that day, which means they packed their bags, locked their doors and went home.
The House of Representatives returned to the Capitol on Oct. 4 but quickly adjourned to the call of the chair, which means the chamber can go back into session at any time until its members finally agree to adjourn.