Oklahoma Court Narrowly Upholds Auto Tax Exemption Removal

The Oklahoma Supreme Court has narrowly upheld the removal of a 1.25 percent sales tax exemption on vehicles sold in Oklahoma.

In a 5-4 decision Thursday, justices ruled that a bill adopted by the Legislature earlier this year is constitutional because it did not levy a new tax, but removed an exemption from an existing tax. The measure is expected to raise about $124 million a year.

The court's majority opinion rejects allegations by the Oklahoma Automobile Dealers Association, an auto dealership and an individual that the legislation violated constitutional guidelines for a "revenue bill" because it was adopted during the final week of the 2017 legislative session and didn't receive 75 percent of the votes in both houses.

Dissenting justices say the measure violates those constitutional guidelines.

Governor Mary Fallin issued the following statement on the ruling:

“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.

"The $215 million represents just state funds, but with the loss of matching federal funds state agencies estimate the total is nearly $500 million.”