WASHINGTON — Auto manufacturers didn't pay up to $10.2 billion in federal gas guzzler taxes last year because of a 22-year-old law that exempts light-duty trucks, including increasingly popular sport-utility vehicles, an environmental group says.
"Automakers are avoiding paying taxes and cranking out polluting and gas-guzzling vehicles," said Brian Dunkiel, director of tax programs at Friends of the Earth, a Washington-based advocacy group. "It's not fair, it's bad for the environment, and it's making America more dependent on foreign oil."
Under a 1978 law passed by Congress to encourage production of fuel-efficient vehicles, U.S. and foreign auto manufacturers must pay taxes ranging from $1,000 to $7,700 for each new passenger car that gets below 22.5 miles per gallon on a combined city-highway average.
Light-duty trucks, which include pickups, minivans, full-size vans and SUVs, were exempted on the theory that many were used in businesses such as construction and on farms. At the time, these vehicles made up about a quarter of new vehicle sales.
Now, however, light-duty trucks are almost half of all new sales and are frequently used more for commuting and other daily chores.
The study released Wednesday by Friends of the Earth concluded that if these vehicles were held to the same 22.5 mpg standard, the industry as a whole would have paid the federal government $10.2 billion alone in additional gas guzzler taxes in 1999 — and $43.1 billion over the past five years.
Taxes that could have applied to SUVs alone in 1999 amounted to $5.6 billion, the study found. Pickup trucks avoided $3.9 billion and vans and minivans, which tend to be more fuel efficient, $811 million.
Meanwhile, the Internal Revenue Service collected only $48 million in gas guzzler taxes on passenger cars in 1998 — the most recent year complete data was available — mainly on luxury sedans and high-end sports cars.
The U.S. auto industry has acknowledged room for improvement in the fuel efficiency of SUVs. Ford Motor Co. recently announced it will increase the fuel economy of its SUV fleet by 25 percent, from 18 mpg to 23 mpg, by 2005. General Motors Corp. says it will offer pickups and buses that burn up to 50 percent less fuel and DaimlerChrysler AG has a gas/electric version of its Dodge Durango SUV ready for market if it can be priced competitively.
Gloria Bergquist, spokeswoman for the Alliance of Auto Manufacturers representing 13 major U.S. and foreign auto companies, said extending the gas guzzler tax to light-duty trucks would inevitably raise costs for consumers while not hastening the availability of more fuel-efficient, less polluting vehicles.
"Automakers are already competing with each other to bring more fuel-efficient vehicles to market," she said. "Our view is that competition is going to drive more progress."
Industry officials also said that the Friends of the Earth report produced inflated estimates of the potential tax avoided, noting that the federal fuel efficiency standard for a company's entire light truck fleet is 20.7 mpg, compared with 27.5 mpg for cars.
But environmentalists said even if light-duty trucks were given a similar fuel-efficiency discount for tax purposes, the 1978 law would still permit them to avoid billions of dollars in taxes every year. They said the exemption acts as a subsidy for larger vehicles that burn more gas and cause more pollution.
"I believe we should close the tax loophole that gives the worst vehicles an advantage," said Ralph Nader, the longtime consumer advocate who is running for president on the Green Party ticket.