‘Gas guzzlers’ targeted by a steep federal tax
The limousine industry is up in arms – trying to fight a 12-year-old federal luxury tax that will drive up the cost on most new limos by several hundred dollars in 2003.
Selling Luxury Real Estate Requires More Than Exposure
By Emilio DiSpirito IV License Partner | Private Office Advisor Engel & Völkers Oceanside www.DiSpiritoteam.com…
Learn More
The so-called “gas guzzler” tax is a sales tax of between $1,400 and $2,200, added to the cost of buying a stretch limousine based on its weight. A change in next year’s Lincoln Town Car stretch limousine models will bump them up to a higher gas guzzler tax bracket.
“The Lincoln Town Car has a changed body style in 2003 – it’s heavier. The gas guzzler didn’t get raised, but it’s going to wind up driving the cost of a standard stretch limo up four or five hundred dollars,” said Tom Mazza, executive director of the National Limousine Association.
At least 65 percent of all stretch limousines on the road are Lincoln Town Cars, said Mazza. The standard Lincoln Town Car limo costs approximately $62,000. Because the vehicles will weigh more next year, the gas guzzler tax tacked on to the price tag for such limos will bump up to $2,100, from $1,700.
Limousine owners say the gas guzzler tax, imposed during the energy crisis in the 1970s, is unfair. Limousines were exempt from the tax until 1991, under an exemption for vehicles used for small businesses.
The NLA has been fruitlessly lobbying lawmakers for years to give limousines a new exemption. But with the luxury tax effectively raising the price of most limos next year, people in the industry believe they have new ammunition in their fight.
The NLA is working with Sen. Bob Torricelli (D-New Jersey) to get an attachment to a bill that would exempt limousines from the tax, said Mazza.
“We’ve been trying for years,” said Mazza. “People see limos and they think, ‘fat cats riding around in limos.’ But 65 percent of our industry is small, home-based operators who own less than four vehicles. The people they’re harming with this tax are the smallest of small business people.”
The higher luxury tax on most new limousines would especially hurt in Rhode Island, home to a relatively large limousine industry, according to Eric Weiner, president of the Rhode Island Limousine Association. There are approximately 75 limousine companies and more than 300 vehicles in Rhode Island, said Weiner.
The state’s limousine industry generates a lot of revenue for the local economy – the limousines average about 75,000 miles per year per vehicle, said Weiner.
“That’s a lot of gas bought and tolls paid,” he said.
Limousine owners in Rhode Island must carry $1.5 million in liability insurance per vehicle. With limo owners also paying annual property taxes on their limos, and the highest gas tax of any state in the nation, many say their operating costs are too high to afford growing their businesses if the cost of standard limousines increases several hundred dollars.
“I’d like to add a new limo to my fleet. I’m operating with one vehicle, I’m a very small company, but this is going to prevent me from purchasing another limo this year, that’s for sure. And I don’t know about next year,” said Beverly Bigelow, owner of A Formal Limousine service, in Warwick.
Weiner said that most limousine owners who do buy the more-expensive limousines next year probably would pass the cost-hike on to their customers. Most limousine companies already charge a standard 8 percent service fee on all reservations. That surcharge might just go up, he said.
“It’s a taxing situation,” said Weiner, who is also the president of All Occasion Transportation, a limousine company with a fleet of 15 limousines in Providence and limousines in more than 600 cities. “Unfortunately, we treat the gas guzzler tax very similarly to fuel prices and insurance – when those prices go up, we pass the cost on to our customers. But believe me, we’d love to see that service fee disappear or at least get lowered.”
Bigelow said her new 2001,10-passenger white ultra-stretch Lincoln Town Car with a mirror ceiling should be exempt from a “luxury” tax, because it doesn’t burn more gas than the standard SUV. She recently traveled to Washington, D.C. at the invitation of Sen. Jack Reed, (D-RI) as part of a delegation of Rhode Island business people. Bigelow said she was disappointed that Reed and other legislators she met with wouldn’t commit to exempting the limousine industry from the gas guzzler tax.
Her limo doesn’t really guzzle all that much, she said.
