[Congressional Record Volume 140, Number 8 (Thursday, February 3, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: February 3, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                  COACHBUILDER'S EXEMPTION ACT OF 1994

                                 ______


                       HON. WILLIAM J. JEFFERSON

                              of louisiana

                    in the house of representatives

                       Thursday, February 3, 1994

  Mr. JEFFERSON. Mr. Speaker, today I am introducing the Coachbuilder's 
Exemption Act of 1994, legislation to redress an inequity in the Tax 
Code relating to the so-called gas guzzler tax exemption for small 
companies who lengthen automobiles into limousines.
  Under section 4064 of the code, a tax is imposed if an automobile's 
fuel economy performance falls below the Environmental Protection 
Agency's [EPA] fuel economy ratings for that automobile's model type. 
The tax, which is imposed upon the sale or initial lease of the vehicle 
by a manufacturer, ranges from $1,000 to $7,000.
  The gas guzzler tax was enacted as part of the Energy Tax Act of 1978 
as a conservation measure and to encourage greater automobile fuel 
economy, a policy goal that I strongly support. However, this policy 
should not be pursued without consideration for special circumstances. 
In this regard, Congress has recognized that certain exceptions to the 
tax are reasonable and necessary to prevent unfairness. For example, in 
1986 Congress amended the gas guzzler tax to exempt small 
manufacturers, generally manufacturers of fewer than 10,000 vehicles 
annually, who lengthen existing automobiles into limousines. Clearly, 
imposition of the tax on such small producers was inappropriate and did 
not generally enhance energy conservation. Regrettably, and with little 
explanation, the coachbuilder's exemption was repealed with the 
enactment of the luxury tax on automobiles in the Revenue 
Reconciliation Act of 1990, although the Reconciliation Act excluded 
limousines operated for commercial purposes from the new luxury tax.
  The repeal of the coachbuilder's exemption in 1990 has had a 
devastating effect on coachbuilders and operators. Jobs have been lost 
and costs to operators have increased dramatically. During 1988 and 
1989, prior to the repeal of the exemption, there were approximately 35 
coachbuilders who lengthened 8,000 to 9,000 cars annually. Today, only 
12 coachbuilders remain and less than 1,400 vehicles annually are 
lengthened. These vehicles bear an average tax of $2,000 per 
automobile--the economic burden of which is directly borne by the 
operator. By and large, the limousine industry is comprised of small 
businesses. The typical operator owns 5 vehicles and must replace one 
vehicle about every 18 to 24 months.
  Mr. Speaker, the legislation I am introducing would reinstate the 
coachbuilder's exemption, and, thereby, eliminate a significant 
economic burden on industry and on limousine operators. Reinstatement 
would have a negligible revenue impact, increase jobs, and redress the 
inequity of imposing a tax that has essentially crippled these small 
businesses.
  The gas guzzler tax, as it applies to coachbuilders and limousine 
operators does little, if anything, to further overall fuel economy. 
Essentially, the tax is a penalty on weddings, school proms, business 
gatherings, and other occasions requiring special transportation 
services. In addition, tax is especially burdensome for operators 
located in tourist centers like my city of New Orleans where limousine 
services are required for vacationers and conventioneers.
  The parallels between this matter and the automobile luxury tax are 
striking. In that case, as with the coachbuilders' and the gas guzzler 
tax, business owners and workers are the victims rather than the 
consumers of the service or product. It is time to fix this problem 
just as we did so just last year with the repeal of the automobile 
luxury tax.
  I urge my colleagues to join me in redressing this situation by 
cosponsoring this bill.

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