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Oklahoma Supreme Court upholds repeal of motor vehicle sales tax exemption

Andrew W. Griffin / Red Dirt Report
A luxury automobile dealership lot in Oklahoma City.
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OKLAHOMA CITY -- The Oklahoma Supreme Court upheld an Oklahoma law today that repeals a sales tax exemption on motor vehicle purchases in a challenge that claimed that the repeal was done improperly during the legislative session.

In a five to four decision, the Oklahoma Supreme Court ruled that the sales tax exemption was repealed legally during the final days of the legislative session. The repeal was one of three challenges stemming from the 2017 Legislature’s budget agreement, and the Oklahoma Supreme Court overturned the cigarette fee earlier this month.

Gov. Mary Fallin said the Supreme Court’s decision Thursday still would not fix the $215 million loss from the court’s striking down of the cigarette tax.

“I appreciate the Supreme Court ruling on this matter in an expeditious manner. This ruling provides us with clarity in dealing with this fiscal year’s

budget. While pleased with today’s ruling, it’s important to keep in mind we must still deal with the immediate problem of the loss of $215 million from the earlier high court ruling that struck down the proposed smoking cessation fee,” she said in a statement. “The $215 million represents just state funds, but with the loss of matching federal funds state agencies estimate the total is nearly $500 million.”

The loss of the expected $215 million from the smoking cessation fee may lead the Oklahoma Legislature into a special session to address how to deal with shortfall, which was earmarked for Oklahoma health care agencies.

In Thursday’s decision, Justice Patrick Wyrick, wrote, “This is the second of several cases challenging various measures enacted by the Legislature this past session in response to the state’s budget crisis. In the first of those cases, we unanimously held that a measure imposing a new $1.50 per pack assessment on cigarettes was a ‘revenue bill…’”

“This cases involves House Bill 2433, which was also enacted during the final five days of the session and did not receive three-fourths support in either legislative chamber. Like the first case, this case involves Article V, Section 33 challenge, but the similarities end there because this case presents the much different question of whether a measure revoking an exemption from an already levied tax is a ‘revenue bill…’ We conclude that HB 2433 is not a ‘revenue bill’ because, despite its revenue-raising purpose, it does not levy a tax in the strict sense of the word.”

The Oklahoma Automobile Dealers Association, L and J Acquisitions, LLC (doing business as Battison Honda) and Caitlin Cannon petitioned the court about the motor vehicle tax exemption.

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