Close Gas-Guzzler Tax Loophole For SUVs? Heaven Forbid!

[hatrack]

New fuel economy standards released Wednesday will require automakers to make improvements in the mileage of pickup trucks, vans, and SUVs - but many of the vehicles will still be exempt from a tax designed to discourage automakers from producing gas guzzlers. The exemption of light trucks gives a major break to producers of some the least fuel-efficient vehicles, and the tax instead targets cars that often get better mileage.

The tax is levied, for example, on the Mercedes-Benz S500, which gets 16 mpg in the city and 24 mpg on the highway. But there's no tax on the Mercedes-Benz ML350 SUV, which gets 16 mpg city and 20 mpg highway. A Congressional report last year cited one environmental group's findings that exempting light vehicles from the tax saves auto companies from paying about $10 billion a year.

The gas guzzler law, created in response to the oil shortage of the 1970s, imposes a tax on vehicles that get less than 22.5 miles per gallon of gasoline, starting at $1,000 and climbing to $7,700 for cars that get less than 12.5 mpg.

The law did not cover light trucks because most vehicles that fit the definition at the time, including pickup trucks and vans, were used for businesses and farms. The explosion in the number of SUVs in the 1990s increased the number of vehicles that qualified as light trucks. The new regulations released Wednesday by the National Highway Traffic Safety Administration will require light trucks to improve their mileage. But they will remain exempt from the gas guzzler law unless Congress changes it.


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http://www.theledger.com/apps/pbcs.dll/article?AID=/20060329/APF/603291196