Auto tax plan: Guzzle and pay, sip and save Little-noted bill focuses on mpg

March 25, 1992|By Peter Jensen | Peter Jensen,U.S. Environmental Protection AgencyStaff Writer

Nearly buried in the pileup of new taxes the House of Delegates passed last night is a proposal that could dramatically affect the cost of buying a new car in Maryland.

Starting this summer, the measure would penalize consumers who purchase new automobiles that guzzle gas while rewarding those who buy fuel "sippers." The difference could mean hundreds of dollars added to or subtracted from a car's purchase price.

If the Senate agrees to the measure, Maryland would be the first state in the nation to adopt such a plan.

Since 1980, the federal government has penalized manufacturersand importers of gas-guzzler cars, charging them $1,000 to $7,700 for each car they market that gets less than 22.5 miles per gallon. The worse the mileage, the bigger the tax.

The Maryland proposal, nestled in a half-billion-dollar revenue package, would directly tax consumers, not car makers. It would set lower penalties for gas guzzlers than does federal law, but tougher standards. And those who buy high-mileage wonders would actually get money back. Here's how it works:

Car buyers in Maryland currently pay a titling tax calculated at 5 percent of the vehicle's sale price (or book value for older cars). If you buy a $15,000 car, you pay another $750 to the Motor Vehicle Administration for titling.

If your car gets between 27 and 33 miles per gallon, the 5 percent tax is unchanged. But for every mile under 27 miles per gallon, you would pay an additional $50. Likewise, you would receive a $50 rebate for every mile over 33 mpg.

That means a car rated at 24 mpg would cost an extra $150. On the other hand, a car rated at 36 mpg gets $150 knocked off.

The same incentives and penalties would apply whenever the car is resold, but the measure would not apply to automobiles purchased before July 1, 1992.

The mileage ratings are based on the U.S. Environmental Protection Agency's research data, which combines highway and city driving. The mileage figures are generally higher than the EPA "adjusted" ratings that appear on the dealer's sticker.

The most a consumer can save under the House-approved plan is his entire 5 percent titling tax. The worst penalty a new car

buyer faces is to see the 5 percent tax doubled.

The tax would go into effect on all new passenger vehicles purchased after July 1. It would also apply to cars purchased out of state but registered in Maryland beginning with 1993 models.

The state Department of Transportation has estimated that the gas-guzzler tax would raise $30 million in fiscal 1993. The bill requires that all revenues from the tax be spent only on public transit.

Most of the money would benefit Montgomery and Prince George's counties by subsidizing their share of operating costs for Washington's Metro bus and rail system -- an estimated $21.4 million next year.

The proposal's sudden emergence in the General Assembly took the state's automotive industry by surprise. Introduced as separate legislation by two Montgomery County delegates, the scheme was added to the House tax package last Saturday by the House Ways and Means Committee.

The only public opposition so far has come from an organization of automobile dealers who fear that the tax could only aggravate their slumping industry.

"This really took us off-guard," said Joseph P. Carroll, executive vice president of the Maryland New Car and Truck Dealers Association."We're obviously concerned because in most cases, we'll be talking about a couple hundred dollars at the point of sale. That goes a little heavy on the consumer."

House leaders have embraced the proposal, in part because they can sell it as an environmental measure as well as a tax increase. It also allowed them to avoid raising the state gasoline tax an extra penny to meet the Metro obligation.

In a year that found lawmakers desperate for painless revenue sources, the gas guzzler plan seemed irresistible.

Sure, they're interested in raising revenue, but this also has a second objective," said Del. Christopher Van Hollen Jr., D-Montgomery, co-sponsor of the original bill.

"It's not a tax for tax's sake. It's the missing piece of the revenue puzzle," Mr. Hollen said.

Environmental groups, including the Chesapeake Bay Foundation, have endorsed the tax as a potentially significant way to help reduce atmospheric pollutants in Maryland, 60 percent of which come from cars and trucks.

Proposed 'gas guzzler' tax

Here are some popular cars and the "gas guzzler" tax or rebate they would be subject to under the House of Delegates tax proposal. The EPA combined city/highway mileage is based on popular engine and transmission combinations. The third column shows the existing federal gas guzzler tax on specific, low-mileage models.

Model. . .. .. ... .... ... . EPA. . .... . Federal. ...... . State

(1992). .. . .. ...... ... . mileage. ..... tax. ........ tax/rebate

Honda Civic. ......... . .. .. 44.0. . ... .. 0 . ........$550 rebate*

Dodge Colt Hatchback.. ....... 39.0. ........ 0 .......... $300 rebate

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