The Act also created the gas guzzler tax which applies to the sales of vehicles with official EPA-estimated gas mileage below certain specified levels. In 1980, the tax was $200 for a fuel efficiency of 14 to 15 miles per gallon, and was increased to $1800 in 1985. In 1980, the tax was $550 for fuel efficiencies of 13 mpg and below, and was changed in 1986 to $3,850 for ratings below 12.5 mpg. The Gas Guzzler tax only applied to cars under 6,000 pounds (2,700 kg), which made the largest SUVs and other large passenger cars exempt from this tax, thus increasing the latter's popularity. Many argue that the 6,000-pound (2,700 kg) limit is actually counter-productive to the purpose of the Gas Guzzler tax by encouraging the use of large SUVs that avoid the tax due to their high weight. The tax is collected by the Internal Revenue Service (IRS) and normally paid by the manufacturer or importer. The following chart shows the tax for various levels of MPG as of 2006.
| Unadjusted MPG (combined) | Tax |
|---|---|
| at least 22.5 | No tax |
| at least 21.5, but less than 22.5 | $1000 |
| at least 20.5, but less than 21.5 | $1300 |
| at least 19.5, but less than 20.5 | $1700 |
| at least 18.5, but less than 19.5 | $2100 |
| at least 17.5, but less than 18.5 | $2600 |
| at least 16.5, but less than 17.5 | $3000 |
| at least 15.5, but less than 16.5 | $3700 |
| at least 14.5, but less than 15.5 | $4500 |
| at least 13.5, but less than 14.5 | $5400 |
| at least 12.5, but less than 13.5 | $6400 |
| less than 12.5 | $7700 |
The combined fuel economy MPG value (55% city, 45% highway) is used to determine tax liability. The MPG value is also adjusted slightly to account for differences in test procedures made since the base year, but it is not adjusted for in-use short fall. The unadjusted combined MPG of a vehicle can be approximated from the city and highway values provided in the Fuel Economy Guide by the following equation:
Since this is an approximate calculation, the actual gas guzzler tax may be off by one tax bracket.
We can then find out how much penalty, , the manufacturer has to pay for that particular vehicle by using the following equation. needs to be looked up on the table above and is the numbers of cars that are found to be under the set Gas Guzzler standard,
Read more about this topic: Energy Tax Act
Famous quotes containing the words gas and/or tax:
“one pale woman all alone,
The daylight kissing her wan hair,
Loitered beneath the gas lamps’ flare,
With lips of flame and heart of stone.”
—Oscar Wilde (1854–1900)
“To tax and to please, no more than to love and to be wise, is not given to men.”
—Edmund Burke (1729–1797)