Is a Hidden Tax On Cars, Trucks, Tractors and Other Vehicles Just Around the Corner?

If there is one issue that has produced slight agreement between Republicans and Democrats, it is the notion that raising taxes during a recession is a bad idea. Even the most ardent tax and spend champions in Washington have been forced to back away from a litany of proposed tax increases on businesses and individuals during these tough economic times. 

President Obama even had to renege on his much touted campaign promise to end the Bush-era tax rates for higher-income earners when he cut a deal with Congressional Republicans to keep income tax rates intact for two more years. 

Despite the lack of appetite from many of our elected officials to pass legislation that would raise taxes, there are a number behind the scenes efforts underway that, if enacted, could easily have the same impact on American businesses and consumers as new tax law.

 One need look no farther than the Environmental Protection Agency which has been granted more authority and power by the president to weigh in on a number environmental issues. 

As an example, the EPA and the National Highway Traffic Safety Administration (NHTSA) are currently considering another rule change for fuel efficiency standards (otherwise known as CAFE standards), for every vehicle driven in this country. If these new rules are imposed and go into effect, they would amount to a substantial, hidden tax on most cars, trucks, vans, crossover vehicles and SUVs in America. 

What's confusing is the fact that the automobile industry has been working in good faith with the federal government to achieve a new, fleet wide fuel efficiency standard of 35-miles per gallon (mpg) by the year 2016. 

In spite of this demonstrated cooperation between government and the auto industry, EPA officials are considering imposing a new round of fuel efficiency standards that would nearly double vehicle mileage to 62 miles per gallon by the year 2025. 

Imagine building a delivery truck or a heavy construction vehicle, an SUV or minivan that is forced to achieve such dramatically higher miles per gallon ratings. The Center for Automotive Research estimates that EPA's imposed fuel efficiency mandates of 62 MPG could increase the cost of a vehicle by more than $9,000 by 2025. 

For truck owners, the per-vehicle price increase could be much higher. The 2010 Chevrolet Silverado 1500 gets a respectable 22-mpg on the highway and 15-mpg on city streets. How much more can a farmer, delivery man, electrician, or tradesman pay for a vehicle that he relies upon for his living? 

If the EPA continues on its present path, the agency's mandates would result in a heavy economic burden in the form of a hidden car/truck tax on the people who need such vehicles to earn a living. 

The EPA and NHTSA are currently studying the impact of the proposed CAFE standards and are scheduled to make a final decision on the rule by September 1, 2011. 

The EPA and our highway administration should avoid imposing arbitrary, unattainable fuel efficiency mandates that will only drive up the price of every vehicle in America. Instead, government officials should continue to work with the auto industry to set realistic, attainable fuel efficiency goals. Present MGP standards of 35 miles per gallon by the year 2016 reflect such government and industry cooperation and should be the model for future discussions about improving the fuel efficiency of the vehicles we drive. 

America's automobile companies are just getting back on track – people are excited about buying American again -- Washington bureaucrats shouldn't hit the breaks on this resurgence with a bunch of new red tape and regulations.

Pete Sepp is Executive Vice President of the National Taxpayers' Union

Pete Sepp is president of the 362,000-member National Taxpayers Union (NTU).