KGOU

State Supreme Court Rules Motor Vehicle Sales Tax Constitutional

Aug 31, 2017

The Oklahoma state Supreme Court ruled Thursday a sales tax on motor vehicles is constitutional.

Lawmakers included the 1.25 percent motor vehicle sales tax as part of the 2018 fiscal year state budget. It is expected to raise more than $100 million for the state in the first year, and took effect July 1.

Motor vehicles in Oklahoma are traditionally exempt from sales tax, but during the last legislative session, lawmakers voted in favor of a bill to remove that exemption.

In the Supreme Court majority opinion, Justice Patrick Wyrick wrote the tax does not violate the Oklahoma Constitution because it is not a revenue bill, and therefore not subject to the constitutional requirements for revenue-raising measures.

 

“We [the Court] have never before in our history held that a measure revoking a tax exemption is a ‘revenue bill’...and to hold otherwise would require us to break new ground and overrule well-established precedents,” Wyrick wrote.

The Oklahoma Automobile Dealers Association and others sued the state in June, arguing lawmakers passed the bill without following the constitutional requirements for passing tax increases. The plaintiffs alleged legislators should not have passed the tax during the final five days of the legislative session, and argued the tax required a three-quarters majority vote to pass rather than a simple majority.

In a statement, Gov. Mary Fallin said she is “pleased” with the ruling, but said lawmakers will likely still need to hold a special session. Oklahoma’s budget is short $215 million following an early August Supreme Court decision striking down a proposed $1.50-per-pack cigarette fee.