California Reanimates the Gas Guzzler Tax. How Great is That?

Robert Farago
by Robert Farago
california reanimates the gas guzzler tax how great is that

In '78, OPEC put America's balls in a vise. Responding to the Oil Crisis, Washington enacted a “gas guzzler tax.” The law levied a federal surcharge on the price of any new automobile that burned fuel at the rate of 21.5 mpg (combined), but less than 22.5 mpg (combined). The worse the car’s EPA mpgs, the higher the tax its buyer had to pay. The effectiveness of the federal gas guzzler tax is beyond debate. Literally. No one claims the purchase tax did anything whatsoever to reduce America’s oil consumption. And yet it’s still with us. What’s more, it’s about to make a comeback.

In case you were wondering, the federal gas guzzler tax rate hasn't changed since 1988. The surcharge still starts at $1k; rising to a maximum of $7,700 for vehicles that get less than 12.5 mpg combined. Did I mention that SUVs and pickup trucks are exempt?

Yes, there is that. When the gas guzzler tax was born, SUV and light truck sales accounted for less than 25 percent of total new car sales. According to Automotive News, the genres now account for 52.5 percent of all American automobile sales.

So if the federal gas guzzler tax was such a great idea back when oil supplies were tighter than a figure skater’s leotard, why not close the loophole now, what with global warming threatening to exterminate billions of humans? Surely that’s a better plan than concocting a cockamamie scheme to force automakers to change their vehicle mix to satisfy an arbitrary average fuel consumption figure? Why not penalize buyers of gas guzzlers and, by doing so, incentivize fuel misers?

Obviously, the domestic manufacturers of said gas guzzlers– automakers who continue to depend on the four-wheeled big ‘uns for their survival– oppose any move to close the SUV/CUV loophole and reinvigorate an otherwise moribund measure. But Detroit’s political power ain’t what it used to be– as witnessed by their failure to win the “debate” over raising federal Corporate Average Fuel Economy (CAFE) requirements. So if "the people" are serious about forcing the country's motorists to switch to more fuel efficient vehicles…

They’re not. The vast majority of American motorists aren’t even up for higher gas taxes– never mind an “SUV tax” down on the showroom floor. Hence CAFE. CAFE maintains the illusion of free choice while “doing something” about the “problem” of low mileage vehicles. It hides the gas guzzler surcharge by passing it on to manufacturers in the form of fines and/or technological costs, which the carmakers then pass on to the consumer. The feds get their money, the carmakers get theirs, and everyone feels virtuous.

There is, of course, a fly in the ointment: California.

The Golden State is truly, madly, deeply committed to taking gas guzzlers off the road. After unsuccessfully attempting to do so by hijacking federal tailpipe regulations, they’ve now decided to think outside the witness box. They’re introducing their own, additional tax on gas guzzlers.

Once again, CA legislators will vote on a plan that would levy one-time registration fees of up to $2500 on low-mileage vehicles. Some “cleaner” SUVs, pickups and minivans would be exempt. Buyers below twice the federal poverty level and businesses with less than 25 employees would be exempt. And buyers of fuel-efficient cars (e.g. the Toyota Prius and Honda Civic) would get hefty “rebates.” Everyone else has to pay for the privilege of paying more at the pump.

No matter how they tweak it, AB493 is a greater a threat to Detroit than California’s ongoing attempt to supercede federal CAFE regs by classifying CO2 as an atmospheric pollutant. That effort was an arcane, back door maneuver destined to fail. This is a full-on assault that challenges environmentally sensitive consumers to put their money where their mouth is.

And it’s going down. A previous version of the bill was only narrowly defeated in June, when auto industry lobbyists convinced seven LA Democrats to abstain from the vote. (Note: abstain, not oppose.) While you can easily argue that the feds should reserve the right to set air quality standards (which they only “lent” to CA anyway), a state sales tax is, clearly, their own business.

So will it work? Will people stop buying gas guzzlers if they cost an additional $2500? Thanks to the SUV loophole, the federal gas guzzler tax has nothing to teach on this matter. We certainly know that onerous automobile taxes in various New England states have created hundreds of thousands illegal, out-of-state registrations. But the simple answer is no. As car salesman will say, $2500 is only $1.37 per day over five years.

Which probably means California is, like the planet, just getting warmed-up. Gas guzzler tax supporters fully embrace the European model, whereby any and all taxes aimed at motorists are a good thing, and those aimed at low-mpg models are great. But the plain truth is that no matter how they’re applied, punitive motoring taxes create an automotive underclass, and enlarge governmental powers. Two fundamentally un-American concepts.

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  • Geeber Geeber on Jan 31, 2008

    California has had the ability to set its own air quality standards since the Clean Air Act was originally passed. Its attempt to regulate carbon dioxide emissions is based on this precedent. California is attempting to expand a power it already has, not claim a new one. As for commutes - it is useless to compare most of the U.S. to places like Tokyo (or London, or Paris). Most people here do not live in large cities, and they have no desire to do so. America (and Canada) have more space than other countries, so people will naturally take advantage of this when choosing where to live, because living in a lower density area (to a point) is more pleasant for most people. Of course, as others have noted, rising population could ruin this, but that involves the implementation of measures much more far-reaching than gas guzzler taxes, although such measures would be more helpful in the long run.

  • Landcrusher Landcrusher on Jan 31, 2008

    Chewy said: "So if the federal gas guzzler tax was such a great idea back when oil supplies were tighter than a figure skater’s leotard, why not close the loophole now, what with global warming threatening to exterminate billions of humans?" Because it was NOT a good idea back then. If you want to reduce emissions, you need to tax fuel, not the vehicles. I agree, close the loophole, get rid of the tax for cars. Let's say you need a vehicle to carry a large family (or any other reason). So you buy one and pay a tax of $4,000. Will you now drive the vehicle LESS because you paid the tax? NO!! You will drive it more. Get your money's worth. It would be better to let you use that money to buy a second, more efficient vehicle for when you don't need the capacity of the big one. Encourage the purchase of the second vehicle by moving the tax to THE FUEL. I have read NOTHING on this thread to contradict my argument. What I keep seeing is a bunch of people arguing to make SOMEONE ELSE pay the tax. Just because you don't want or truck. Well let me tell you something folks. They will come to get taxes on things you want next. Playing that game with the government is like playing cards with the casino. You may win a little today, but they will always win in the long run. If you care about emissions, then you are for a fuel tax rather than a car tax. If you are a socialist, you are for taxing things other people want (usually people wealthier than you). That's all there is to it.

  • Dusterdude @El scotto , I'm aware of the history, I have been in the "working world" for close to 40 years with many of them being in automotive. We have to look at situation in the "big picture". Did UAW make concessions in past ? - yes. Do they deserve an increase now ? -yes . Is their pay increase reasonable given their current compensation package ? Not at all ! By the way - are the automotive CEO's overpaid - definitely! (That is the case in many industries, and a separate topic). As the auto industry slowly but surely moves to EV's , the "big 3" will need to be producing top quality competitive vehicles or they will not survive.
  • Art_Vandelay “We skipped it because we didn’t think anyone would want to steal these things”-Hyundai
  • El scotto Huge lumbering SUV? Check. Unknown name soon to be made popular by Tiktok ilk? Check. Scads of these showing up in school drop-off lines? Check. The only real over/under is if these will have as much cachet as Land Rovers themselves? A bespoken item had to be new at one time. Bonus "accepted by the right kind of people" points if EBFlex or Tassos disapproves.
  • El scotto No, "brothers and sisters" are the core strength of the union. So you'll take less money and less benefits because "my company really needs helped out"? The UAW already did that with two-tier employees and concessions on their last contract.The Big 3 have never, ever locked out the UAW. The Big 3 have agreed to every collective bargaining agreement since WWII. Neither side will change.
  • El scotto Never mind that that F-1 is a bigger circus than EBFlex and Tassos shopping together for their new BDSM outfits and personal lubricants. Also, the F1 rumor mill churns more than EBFlex's mind choosing a new Sharpie to make his next "Free Candy" sign for his white Ram work van. GM will spend a year or two learning how things work in F1. By the third or fourth year GM will have a competitive "F-1 LS" engine. After they win a race or two Ferrari will protest to highest F-1 authorities. Something not mentioned: Will GM get tens of millions of dollars from F-1? Ferrari gets 30 million a year as a participation trophy.