Bush Tax Plan Encourages Gas Guzzlers

Tax proposal seeks to triple tax deduction on large SUVs.

Published: 20-Feb-2003

ONG>Katherine Stapp

NEW YORK, Feb 19 (IPS) - President George W. Bush is seeking to triple a tax break for huge gas-guzzling vehicles, despite opposition from environmental groups and taxpayer watchdogs who say the move seriously undermines efforts to reduce U.S. oil consumption.

Light trucks and vans (LTVs) have been eligible for a business-related tax deduction since the 1980s, under the theory that they are used for hauling heavy goods. But the Bush tax break would favour Sports Utility Vehicles (SUVs), which are classified by weight as LTVs even though they are often used as passenger vehicles.

Critics say the tax break has encouraged people from all lines of work, including real-estate agents, lawyers, consultants and many others to buy a luxury SUV instead of a luxury car, which is not eligible for the same deductions.

In 1985, SUVs accounted for only two percent of new vehicle sales. They now account for one in four new vehicles sold, and sales continue to climb.

”The increased market for SUVs has blown a hole in the original intent of this tax break,” said Aileen Roder, programme director for Taxpayers for Common Sense, which is urging that the loophole be closed.

”Currently there are at least 38 vehicles that qualify for the break, the majority of which are not being used as a work vehicle - the original intention of this provision in the tax code,” she said.

The Lincoln Navigator, one of the biggest and least fuel-efficient SUVs, is now eligible for a 33,240-dollar tax break. In contrast, a Honda Civic gas-electric hybrid gets a tax credit of only 9,660 dollars. Under Bush's stimulus plan, the maximum deduction - for a 102,000-dollar Hummer, say - would be 75,000 dollars.

Bush's Republican Party received about 10 million dollars in contributions from the auto industry prior to the 2002 elections.

Safety is also an issue. Since most SUVs are classified as LTVs by the federal government, they do not have to comply with the same safety standards as cars do.

According to the National Highway Traffic Safety Administration (NHTSA) in fatal crashes, SUVs are twice as likely to roll over than passenger cars. And in side impact crashes, they are far more lethal than passenger cars. For example, when SUVs strike passenger cars on the left side, the risk of death to the car driver can be 30 times higher than the risk to the SUV occupant.

NHTSA Administrator Jeffrey Runge is scheduled to appear before Congress next week to discuss SUV safety.

SUVs also worsen environmental problems like global warming, critics say. Today's average new car gets about 28 miles per gallon. Most SUVs get less than 20 mpg, and some of the most popular models get only 14 to 15 mpg combined city-highway driving.

On average, an SUV emits 70 tonnes of carbon dioxide in its lifetime, compared to 50 tonnes produced by the average car.

”With oil prices reaching a two-year high this week, and the country facing possible price and supply shocks if war with Iraq materialises, the president should be preaching fuel economy, not encouraging the purchase of vehicles that take the opposite route,” said David Nemtzow, president of the Alliance to Save Energy.

”When all is said and done, energy efficiency remains the quickest, cheapest, cleanest way to reduce our country's growing and deadly oil dependence and enhance national security,” Nemtzow said.

Others have carried their opposition to SUVs much further. A group called 'The Detroit Project' recently released a series of TV ads that accuse purchasers of the vehicles of supporting terrorism, because, they say, some oil profits made in Middle Eastern countries have been diverted to terrorist groups.

According to 'Time' magazine, 70 percent of people it surveyed in a recent poll said Congress should legislate better gas mileage for SUVs.

In his January State of the Union address, Bush pledged to reduce the nation's oil consumption by raising fuel efficiency standards and investing 1.7 billion dollars over the next five years in hydrogen fuel-cell research.

Hydrogen-powered cars are zero-emissions vehicles, with water as the only by-product. Some automakers have already unveiled prototypes, and say they could be mass-produced in as little as five to 10 years.

Most environmental groups support fuel-cell research, but many argue that other measures to reduce tailpipe emissions must be taken immediately.

”Hydrogen requires energy to produce. So hydrogen fuel cells are only as clean as the fuels used to produce them,” the Sierra Club said in a statement. ”Most important, the president's plan serves as a shield to protect automakers from improving fuel economy, which would reduce our oil dependence and cut pollution today.”

”If the vehicles on the road today simply used existing technology to average 40 mpg, we would save over three million barrels of oil a day, more than we currently import from the Persian Gulf.”

Last month, the administration showed signs of reconsidering the massive tax break for SUVs. ”We have an open mind about whether the deduction for cars needs to be refined,” said John Graham, the administrator of the Office of Information and Regulatory Affairs in the Office of Management and Budget. (END/2003)

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