August 30, 2006 - NEW MARKEY REPORT REVEALS TAX SUBSIDIES FOR PURCHASE OF SUVS WILL COST TAXPAYERS NEARLY $16 BILLION, INCREASE OIL DEPENDENCE

WASHINGTON, D.C. -- U.S. Representative Edward J. Markey (D-MA), a senior member of the House Energy and Commerce and Resources Committees, released a report today analyzing special tax preferences for inefficient autos such as sport utility vehicles (“SUVs”), which includes a letter from the bipartisan Joint Tax Committee of Congress estimating that these loopholes will cost $2.6 billion next year and $15.7 billion over the next ten years.  Markey has been a leader on increasing fuel economy standards for cars and SUVs and is the chief co-sponsor of a bill with Rep. Sherry Boehlert (R-NY) to increase fuel economy standards to 33 miles per gallon.

“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.”

Markey’s report, “Tipping the Scales,” focuses on two tax policies that favor the purchase of heavy inefficient passenger vehicles (SUVs, light trucks, minivans) over more efficient models (sedans and station wagons).  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.

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 300C, 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  Regardless of whether we ever ramp up and modernize the minimum fuel economy standards, providing these out-of-date tax incentives that reward the purchase of inefficient vehicles just make things worse.”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, and has received “revenue estimates” of the effects of each reform from the Joint Tax Committee, as follows:

 

Estimated Revenue Effect of H.R. 5579, the No Special Subsidies for Gas Guzzlers Act

2007-2011

2012-2016

Depreciation Reform

$2.9 billion

$4.1 billion

Gas Guzzler Tax Reform

$8.0 billion

$11.6 billion

Total

$10.9 billion

$15.7 billion


- For a complete copy of Tipping the Scales, click here: Tipping the Scales 08.30.06.doc
- For a Revenue Estimate of the Joint Tax Committee, click here: JTC Revenue Estimate.pdf
- For the text of Markey Bill "No Special Subsidies for Gas Guzzlers Act," click here: Gas Guzzler-JTC amended text.txt

FOR IMMEDIATE RELEASE
August 30, 2006

CONTACT: Israel Klein
202.812.8193