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 new study from Friends of the Earth, "Gas Guzzler
Loophole: SUVs and Other Light Trucks Drive Off with Billions,"
finds that auto-makers are exploiting a gaping loophole in the
federal tax law that encourages production of more polluting
and gas-guzzling vehicles. The loophole translates into billions
of dollars annually for the most polluting vehicles light trucks
and sport utility vehicles. You can view the report at www.foe.org/gasguzzler.
 The
study comes as controversy swirls around steep increases in gasoline
prices. While many areas of the country are faced with dramatic
price increases, automakers continue to marketing gas-guzzling
sport-utility vehicles (SUVs) to consumers. Why?
The study
suggests an answer: money. Tax money. While other cars are subject
to the federal gas-guzzler tax, SUVs and light trucks are exempt.
"Automakers
are avoiding paying taxes and cranking out polluting and gas-guzzling
vehicles," said Brian Dunkiel, Director of Tax Policy at
FoE. "It's not fair, it's bad for the environment, and it's
making America more dependent on foreign oil."
Enacted in
1978, the gas-guzzler tax is a little-noticed environmental measure
that applies to less fuel-efficient cars. Automakers must pay
the tax on cars that get less than 22.5 miles-per-gallon. The
worse the fuel efficiency, the higher the tax. However, SUVs
and other light-trucks that get less than 22.5 miles to the gallon
are exempt. If they were not exempt, automakers would pay more
than $10 billion a year in taxes, according to the Friends of
the Earth study.
"This
is the single largest subsidy for pollution in the world,"
said Sean Moulton, Economic Incentives Analyst at FoE. "Why
should a gas-guzzling SUV be exempt when a gas-guzzling sports
car is not?"
Friends of
the Earth found that General Motors and Ford Motor Company benefit
the most from this tax exemption, each avoiding over $3.3 billion
in taxes in 1999. Earlier this month, GM announced the company
would focus on SUVs and light trucks for new vehicles.
Friends of
the Earth researched the value of the exemption of light-duty
trucks to auto manufacturers. This information could help explain
why automakers are rushing to produce and develop new light trucks
- especially SUVs. It could also help explain why these vehicles
are being marketed so aggressively. 
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