AAA Oregon responds to Oregon Supreme Court Opinion on Privilege Tax

AAA Oregon/Idaho Auto Source, LLC, AAA Oregon/Idaho and Oregon Trucking Associations, Inc. V. State of Oregon SC S065394

AAA Oregon/Idaho is pleased with the clarity provided by the Oregon Supreme Court on the privilege tax. The Court’s opinion states that the privilege tax falls outside the purview of the Highway Trust Fund.

The privilege tax was included in the $5.3 billion transportation package, HB 2017, passed by the Oregon legislature in July 2017. It’s a tax on car dealers for having the “privilege” of doing business in the state. The tax is 0.5 percent on the retail price of new vehicles. Dealers can pass the tax on to the purchasers.

When the transportation package was being debated in Salem last year, lawmakers and stakeholders had differing opinions on whether such a tax was subject to Article IX, Section III of the Oregon constitution which states that all taxes and fees paid by motorists for the use or ownership of vehicles have to go to the Highway Trust Fund and be used to pay for Oregon’s roads, highways, bridges and roadside safety rest areas. Even legislative counsel had different opinions. Because of this uncertainty, lawmakers added a provision into HB 2017 for expedited review by the Oregon Supreme Court so that the matter could be decided by Oregon’s highest court.

We appreciate the foresight of lawmakers in calling for the quick review by Oregon’s highest court. The ruling clarifies the constitutional questions surrounding the privilege tax, which was AAA’s principal concern.