USA: Vehicle makers oppose proposed business SUV tax deduction cuts - report

By just-auto.com editorial team | 13 October 2003

An effort in the United States Senate to cut tax deductions for small businesses that buy sport utility vehicles is running into opposition from vehicle makers, who say the deductions are fair and should be expanded, Associated Press (AP) reported.

AP said the Senate Finance Committee quietly voted this month to cut the amount small businesses can deduct for buying an SUV from $US100,000 to $25,000 and the bill is now headed for the full Senate, where some lawmakers have called for a complete repeal of the deduction which applies only to vehicles that are 6,000 pounds or more.

Eron Shosteck, a spokesman for the Alliance of Automobile Manufacturers, told AP on Friday that instead of making the deduction smaller, Congress should expand it to all types of vehicles - as it is, he said, the deduction is unfair.

"The net effect is it ends up discriminating against small business people who would use a sedan to conduct their business rather than something larger," he said, according to AP.

But Taxpayers for Common Sense, an independent watchdog group that opposes wasteful government spending, told Associated Press that closing the loophole would generate $1.3 billion in revenue over 10 years.

"While this Hummer of a tax break needs to be run over and killed, shrinking of it is a good first step," Keith Ashdown, the group's vice president of policy, reportedly said.

AP noted that tax deductions for trucks and SUVs first appeared in the mid-1990s and were meant for farmers and other small businesses that needed large vehicles. The amount of the deduction at the beginning of this year was $25,000, but it grew to $100,000 this summer as part of an economic stimulus package, the report added.