A divided Oklahoma Supreme Court has ruled that the automobile sales tax implemented this year is constitutional.
Lawmakers adopted the 1.25-percent tax in a push to create more revenue. It is expected to bring in more than $100 million in the first year.
Vehicle purchases have historically been completely exempt from sales tax, and the Legislature modified that exemption in May. Two lawsuits filed after session ended challenged the law on the grounds it was a revenue-raising measure that didn’t meet the requirements for raising taxes.
A majority of the court said that because the tax already existed but was just exempted in state law, the Legislature was within its rights to remove some of the exemption without following stringent guidelines that make it nearly impossible to raise taxes.
The 5-4 ruling preserves the tax, and more importantly for lawmakers pondering a special session, the revenue that it’s expected to generate. The court previously struck down a cigarette fee that would have raised $215 million for several state agencies.
Justice Patrick Wyrick wrote that the case presents a much different question than the cigarette fee challenge. Instead of invoking a new “tax,” he said, lawmakers revoked part of an existing tax exemption.
The lawsuit was filed on behalf of the Oklahoma Automobile Dealers Association, Battison Honda and Caitlin Cannon.
A similar lawsuit against the tax and other sources of revenue that lawmakers found this year has not yet been decided. That challenge, filed by Republican gubernatorial candidate Gary Richardson, also targets an electric and hybrid vehicle fee and a freeze in the standard income tax deduction rate.
Yet another pending lawsuit filed by the Sierra Club asked the court to toss the electric and hybrid vehicle fee.