Auto tax ruling has newly defined course of Oklahoma history (Capitol Update)

Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1991. He currently practices law in Tulsa and represents clients at the Capitol.

The Supreme Court ruled last week on the constitutionality of HB 2433 that, last session, removed the sales tax exemption and added a 1.25 percent sales tax on the sale of motor vehicles. Boy, was I wrong!! I would have bet the farm that the court would hold HB 2433 in violation of SQ 640 and unconstitutional. The ruling was a 5-4 decision with the opinion being written by the newest member of the Court, Justice Patrick Wyrick. If Justice Wyrick, who was one-day short of 11 years old when SQ 640 was passed by a vote of the people, does nothing else remarkable in what will probably be a lengthy tenure on the Court, he along with the four justices who joined him have newly defined the course of Oklahoma history. In fact, this decision is no less sweeping than the original passage of SQ 640 in 1992.

I read both the majority opinion and the separate minority opinions, and I still think HB 2433 should have been held unconstitutional. But guess what? If the Court made a mistake, the right to make that mistake belongs to it. This is a good time for me and those who might feel the same way to remember that reasonable minds can differ. The members of the Court, all rational people of good will, have deliberated and ruled. Now it’s time for the people and the political branches of government to work with it.

No doubt the Court’s ruling will be welcomed by Governor Fallin and those who see removal of sales tax exemptions on most services to be part of the answer to the state’s structural budget problem. The proposal was dead on arrival during the last session. But this opinion could revive it because placing an existing tax on new items is not a new tax “in the strict sense” according to the Court. The chances of increasing the excise tax on gasoline are dimmer because that is a tax increase requiring a 75 percent vote. But perhaps the Legislature could remove the sales tax exemption on gasoline. That, again, would not be a new tax. Restoring the previously lowered gross production tax on oil and gas and personal income tax rates probably have little to no chance of passage in the foreseeable future. That would be interpreted as raising taxes.

From a political perspective, the Republican leadership and membership in the legislature now own the structural budget problem. With a 72-27 majority (2 vacant seats in likely R districts) in the House and a 40-7 majority (1 vacant seat) in the Senate, the Republicans control the revenue issue. Democrats are no more likely to vote for the kinds of revenue measures Republicans want without some concessions on revenue measures Democrats want, and Democrats have no leverage to get any concessions. At least the Republicans have one advantage they did not have before: clarity from the Supreme Court.


Steve Lewis served as Speaker of the Oklahoma House of Representatives from 1989-1990. He currently practices law in Tulsa and represents clients at the Capitol.

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