Lobbying Effort Readied for Repeal of Gas Guzzler Penalty in’93

Posted on January 1, 1993 by Scott Fletcher

Fund raising and letter writing could unite coachbuilders and operators.

After two years of being the only transportation industry subject to a gas guzzler penalty, it appears that 1993 will be the year in which livery operators learn whether or not an exemption can be created for commercial limousines. A lobbying plan has been commissioned by the Limousine Industry Manufacturers Organization (LIMO) and a decision on the plan is expected this spring. If a lobbying effort does take place, the industry will have its answer by year end. If it does not, the gas guzzler penalty would appear to be here to stay.

Limousines average approximately 19 miles per gallon which carries a penalty of $2,100 per vehicle. With more than 4,000 limousines purchased in the past two years, limousine buyers have paid over $8.4 million in gas guzzler penalties to date Jay Meyers, president of American Custom Coachworks, believes that the penalty steers buyers toward used limousines rather than new ones. He estimates that the penalty may have hurt industry sales by as much as 30 percent in 1992.

The current effort to lobby against the penalty began in the summer of 1992 when Meyers con­tributed $5,000 to fund a feasibility study on the issue by Washington, DC attorney Jeffrey Berger. LIMO contributed the balance of Berger’s $10,000 fee for the study which will be completed after Congress convenes this spring.

“In 1992, Congress passed a tax bill repealing the luxury tax on automobiles and boats,” explains Berger, “but President Bush didn’t sign it, so it never became law Another effort may be made to repeal the tax again this year and that’s the time to take action.” No action on taxes is expected until Congress receives its first tax proposal from the Clinton administration.

Berger has not yet outlined any specifics about how lobbying efforts might be pursued. He indi­cates, however, that potential changes in tax legislation will originate in the Senate Finance Committee and/or the House Ways and Means Committee The industry would presumably make its case to members of one or both of these committees

One argument expected to be used is that the gas guzzler penalty unfairly singles out the limousine industry for a fee that no other form of commercial transportation is subject to. It is also expected that the industry will document the negative economic impact of the penalty on limousine buyers and manufacturers. Another argument may be that the gas guzzler penalty has not had any positive effect on fuel consumption in the limousine industry.

It might also be argued that the cost of enforcing the penalty greatly offsets the revenue generated for the government. The cost of enforcement includes the auditing of limousine manufacturers by the Internal Revenue Service, and the administration of .an emissions certification program by the Environ­mental Protection Agency (EPA) (see related story on page 14).

Lobbying Could Cost $50,000

In 1986, Berger represented the National Limousine Association (NLA) in a lobbying effort which created a gas guzzler exemption for commercial limousines. This exemption was later repealed when the gas guzzler tax was instituted. Berger believes that a similar effort could now be successful. The cost of the previous campaign was $38,000 Projections for 1993 are as high as $50,000.

A majority of those contacted by Limousine & Chauffeur on this issue are pessimistic about chances for success. Some believe that the cost of a lobbying campaign is too great for the industry, and others feel that Congress will be unwilling to part with this revenue.

“I’ve become resigned to the fact we have to pay the gas guzzler penalty,” says Tom Mulligan of Metropolitan Limousine in Chicago. “I would be willing to contribute to a lobbying campaign,” he continues, “but I don’t know if this industry can afford to support an expensive program. It would need to be shared by operators and coach- builders “

Jerry Lottus, attorney for LIMO, believes a key to the effort will be finding a sponsor in Congress to support the issue “Once you have your ‘angel,’ you can encourage members of the industry to send him a letter of support with copies to their local Congress person.”‘

Even if the industry finds an “angel,” Lottus foresees resistance due to the perception that the gas guzzler penalty is passed on to affluent limousine users. “It will be tough to convince both houses of Congress that such a high profile industry should be exempt,” he says.

LIMO president Marsha Tortora agrees that the industry faces an uphill battle. “I doubt it will be rescinded,” she says. “LIMO really doesn’t have enough clout to fight this, but we are pursuing it on behalf of our customers.”

Tortora also believes that Berger’s feasibility study might identify contacts in Congress who can assist the industry on other issues “EPA requirements are becoming a tremendous problem,” she says.

Last October, NLA executive director Wayne Smith told board members that he sees little hope for a gas guzzler exemption “I don’t know what could make an exemption happen,” he told L&C The NLA board will review the matter again in January, but has determined not to fund a lobbying campaign unless there is a better prospect for success

But Meyers insists that a commercial exemption is justified since limousines carry an average of four to six people which makes them more fuel-efficient than private automobiles. “LIMO should do as much as possible on this,” he says, “and the NLA should be involved too. A lot of people are just rolling over and giving up It’s time we stood up on this.”

Industry Views on Gas Guzzler Penalty

 “I’ve become resigned to the fact that we have to pay it, but it doesn’t seem right. I could understand it if it was my personal car”

— Tom Mulligan, Metropolitan Limousine. Chicago

The gas guzzler penalty encourages people to buy used limousines instead of new ones Eliminating the penalty would increase our sales 30 percent to 40 percent “

— Jay Movers. American Custom Coachworks

“We have committed $10,000 to creating an exemption, and we’re hoping the NLA will join us

—Beth Armstrong, executive director, Limousine Industry Manufacturer’s Organization

“The argument that there shouldn’t be a gas guzzler penalty on commercial transportation make;, the most sense The problem is that it appears the cost is passed on to high profile users.”

—  Jerry Lottus, attorney. Limousine industry Manufacturer’s Organization.

“We have received a negative report on the probability of doing away with the gas guzzler We would be willing to contribute [to a lobbying effort] if results could be guaranteed “

— George Jacobs president, National Limousine Association

“I don’t know what could make an exemption happen I’ve discussed it with lobbyists and they’re not hopeful.”

—Wayne Smith, executive director, National Limousine Association.

“I doubt it will be rescinded, but we are pursuing it on behalf of our customers, and because we need to make the right connections to deal with other issues that are coming up ‘

—Marsha Tortera. Empire/Games Coach- builders, president. Limousine Industry Manufacturer’s Organization.

Leading Gas Guzzler States by Revenue

These figures are based on an average penalty of $2,100 per vehicle. The numbers are based on total sales since January 1 1991. Statistics provided by the L&C Research Department.

California......................................... $1,880,000

Missouri............................................ 1,260,000

Illinois................................................ 1,050,000

Arkansas.............................................. .840,000

Michigan............................................... 840,000

New York............................................. 630,000

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