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Senate fails to pass measure that exempts trucking industry from additional tax

370225 03: Tractor-trailer rigs are parked at the Petro truck stop May 29, 2000in El Paso, TX. Many of the rigs now have modern wireless communications as well as cable television, refrigerators, double bunk beds, and microwave ovens. In the last few years trucks have become more like a home/office on the road. (Photo by Joe Raedle/Newsmakers)

OKLAHOMA CITY – An Oklahoma lawmaker is speaking out about an unintended consequence of a measure that was passed last legislative session.

Last session, lawmakers decided to remove an exemption related to a 1.25 percent tax on motor vehicles.

Now, Oklahomans purchasing a vehicle will have to pay a 1.25 percent tax on top of the 3.25 percent excise tax.

Removing that exemption is expected to generate $123 million within the next fiscal year.

Earlier this year, the Oklahoma Supreme Court ruled that the bill is constitutional since lawmakers only removed an exemption, and did not implement a new tax.

“Applying a test we have utilized since 1908, we conclude that HB 2433 ‘does not levy a tax in the strict sense’ because it removes a tax exemption from an already levied tax rather than levying a new tax,” the court ruled.

However, one Oklahoma state representative says that the measure had an unexpected impact on the trucking industry.

In September, Majority Floor Leader Jon Echols announced that he was filing legislation to clarify that the removal of the exemption should not apply to the purchase or transfer of semi-trucks.

“We certainly want to protect the trucking industry in Oklahoma because of their contribution to job growth and economic development in our state,” said Echols.“We want to continue to be a primary destination for both large and small companies to tag their long-haul transportation vehicles. We will look at a legislative fix in the coming months, and I anticipate the Governor and Senate will support that effort.”

However, Echols says that the measure failed to gain enough votes in the Senate to protect the trucking industry.

When HB 1074 went before the House, members approved the bill by a vote of 63 to 20.

In the Senate, the measure was struck down 17 to 20.

“This bill is a net positive revenue bill for the state without a tax increase. The purpose is to maintain Oklahoma’s economic status as the primary place for large and small trucking companies to register their trucks and trailers. Those companies are going to move their operations to other states unless we find a legislative fix that continues that partnership. Oklahoma has been the primary tagging destination for fleet vehicles since the 1990s when this program was started. Wal-Mart alone buys 6,000 new trailers every year and registers them in Oklahoma. This encourages that company and other companies to register their other fleet vehicles in this state. This bill is not just about large trucks and trailers, but to encourage registration in Oklahoma of commercial vehicles that are bought all over the nation. Local tag agents will be adversely affected by this bill’s failure to pass. I hope the Senate will reconsider this bill quickly so that jobs and revenue don’t leave the state,” Echols said on Thursday.