State Supreme Court Rules Vehicle Sales Tax is Constitutional

By a vote of 5-4, the Oklahoma Supreme Court on Thursday struck down the vehicle sales tax measure that passed in May during the last week of legislative session.

Legislators used a repealer to eliminate an exemption to the tax on automobile sales.

The bill was contested on the allegation that it created a new tax. Gubernatorial candidate Gary Richardson filed the lawsuit on behalf of the Oklahoma Automobile Dealers Association and others seeking to block the tax hike.

Two additional challenges were made including a new cigarette tax and a fee for electric and hybrid automobiles.

Last month, the Oklahoma Supreme Court ruled the cigarette tax was unconstitutional, resulting in a $500 million state budget deficit. The decision also disappointed legislative leaders including Gov. Mary Fallin.

Justice Patrick Wyrick differentiated the vehicle sales tax case from the cigarette fee challenge by stating the former invoked a new tax while the latter simply revoked an existing tax exemption.

The Supreme Court has not yet weighed in on the lawsuit filed by the Sierra Club regarding the electric and hybrid car fee.

Gov. Fallin has indicated that she will call a special session to address the budget deficit after the high court has ruled and the outstanding tax cases. There’s one more to go.

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