Oklahoma Automobile Dealers Ass'n v. State Ex Rel. Oklahoma Tax Commission
2017 OK 64
Okla.2017Background
- In 2017 the Oklahoma Legislature enacted HB 2433 during the last five days of the session; it partially revoked a long-standing sales-tax exemption for motor-vehicle sales so that a 1.25% portion of the sales tax would apply to vehicle sales going forward.
- HB 2433 did not change the statutory sales-tax rate (68 O.S. §1354) nor the motor-vehicle excise tax levies (68 O.S. §2103); it amended the exemption provisions (68 O.S. §§1355, 2106).
- Petitioners challenged HB 2433 under Okla. Const. art. V, §33 (revenue-bill rules): bills raising revenue must originate in the House, not pass in final five days, and must be approved by voters or by 3/4 of each chamber.
- The court applied the traditional two-part test used in Oklahoma: (1) the bill’s principal object is raising revenue, and (2) it levies a tax “in the strict sense.”
- The majority concluded HB 2433’s principal object was revenue-raising but that it did not “levy” a tax in the strict sense because it only removed (in part) an exemption to an already-levied tax; therefore §33 procedural requirements did not apply.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HB 2433 is a "revenue bill" under Art. V, §33 | Petitioners: HB 2433's principal purpose is to raise revenue and it effectively increases taxation on vehicle purchasers, so it is a revenue bill subject to §33 | State/Respondents: HB 2433 merely removes a portion of a preexisting exemption to an already-levied sales tax; it does not levy a new tax in the strict sense | Court: Principal-object test satisfied, but not a revenue bill because it does not levy a tax in the strict sense — it partially rescinds an exemption to an existing levy |
| Whether removal of a tax exemption can qualify as "levying a tax in the strict sense" | Petitioners: Functional effect matters — if people pay more, it is effectively a new tax (and should trigger §33 protections) | Respondents: Longstanding precedent treats making previously-exempt property subject to taxation as not a levy; removal of exemption ≠ new levy | Court: Follows precedent — removal of exemptions historically treated as not a levy; HB 2433 is therefore not a revenue bill |
| Whether the 1992 amendment (State Question 640) changed the definition of "revenue bill" to cover exemption-removal measures | Petitioners: SQ 640 demonstrates voter intent to restrict measures that raise revenue; the amendment should be read broadly | Respondents: SQ 640 altered procedural requirements only; it did not change preexisting judicial meaning of "revenue bill" | Court: SQ 640 did not amend the scope/definition of "revenue bill"; prior two-part test remains controlling |
| Remedy / relief requested (writ of prohibition) | Petitioners: Seek prohibition because HB 2433 violated §33 (passed in final five days, lacked 3/4 votes, not submitted to voters) | Respondents: No §33 violation because HB 2433 is not a revenue bill | Court: Denies writ; assumes original jurisdiction but upholds HB 2433 as constitutional |
Key Cases Cited
- Leveridge v. Oklahoma Tax Comm'n, 294 P.2d 809 (Okla. 1956) (held amendments that make previously-exempt property subject to taxation are not per se "revenue bills")
- Anderson v. Ritterbusch, 98 P. 1002 (Okla. 1908) (articulated the two-part test: principal object to raise revenue and levy a tax in the strict sense)
- Naifeh v. State ex rel. Oklahoma Tax Comm'n, 400 P.3d 759 (Okla. 2017) (applied the traditional test while emphasizing whether a measure is the type the electorate intended to be subject to §33)
- Fent v. Fallin, 345 P.3d 1113 (Okla. 2014) (analyzed State Question 640 and held the amendment changed certain aspects of revenue-bill analysis, notably how revenue-decreasing measures are treated)
- Calvey v. Daxon, 997 P.2d 164 (Okla. 2000) (held the 1992 amendment changed procedural method for raising revenue but did not, on its face, alter the judicially understood meaning of "revenue bill")