Another backlash against large sport utility vehicles appears to be looming in the US state of Oregon, according to a recent Reuters report. The news agency said Oregon’s state government is seeking to pass a law that would make buyers of big SUVs pay more in local taxes if they claim them as a business expense in their federal tax returns.
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At stake, Reuters noted, is a federal tax loophole that lets small business owners reduce their taxable income by as much as $US75,000, a limit that was recently raised from $25,000 under the tax cut legislation President Bush signed into law in May.
Oregon legislators, who are grappling with a $2 billion budget shortfall, reportedly said the federal SUV tax break is costing the state valuable tax income worth some $750,000 a year, according to Reuters.
Jackie Dingfelder, one of the bill’s sponsors, reportedly said last week that the bill only disconnects Oregon from a federal law that is abused by business owners, Reuters said.
“It makes good public policy for a number of reasons,” Dingfelder told Reuters. “It encourages people to buy vehicles that create less pollution and it puts money back into the state coffers. It’s a win-win.”
According to Reuters, under the proposed legislation, which is making its way through Oregon’s state senate, businesses would be required to report triple the amount of their federal tax write-offs as income when they file their local tax returns.
The state law, if passed, would take effect from 2004 and apply only to larger SUVs rated over 6,000 pounds, the report added.
Farmers and construction workers would be exempted, Dingfelder reportedly said.
Auto dealers told Reuters that the state’s proposal was full of “smoke and mirrors” and said the bill would harm business growth at a time when small businesses are struggling.
“The whole idea of the federal government is to increase spending right now to quicken economic development,” Monty King, executive director of the Oregon Independent Auto Dealers Association, told the news agency.
“Probably the worst thing about this is it points to Oregon and says they’re against small businesses; they don’t understand small businesses,” King reportedly added.
The bill is now before the Oregon senate’s revenue committee, Reuters said.
