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Republicans Change Vote on Massive Lube Oil Tax Increase

Brandon Moseley

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By Brandon Moseley
Alabama Political Reporter

Thursday, May 7, the Ways and Means Education Trust Fund Committee held a rare second committee meeting of the week to consider the controversial HB587, which exponentially increases the lube oil tax.  Lube oil is used by manufacturers, farming, the forestry industry, and construction to keep heavy equipment properly lubricated.

HB587 sponsored by Rep. Collins (R-Decatur) inexplicably imposes a $200 per barrel fee on the common industrial lubricant.

The massive tax increase was rejected by the committee on Wednesday.  On Thursday Chairman Bill Poole (R-Tuscaloosa) called the hasty meeting to reconsider the tax.

The press corps followed the Committee meeting from the press room via audio while monitoring the Rep. John Rogers filibuster of prison reform legislation he supported on the floor, but filibustered anyway out of spite for the passage of controversial Birmingham Waterworks legislation on Tuesday.

Rep. Ed Henry (R-Hartselle) spoke for the controversial tax increase legislation since Collins was absent.

Henry said, “I have had a lot of different entities contact me on this.”  I am proposing an amendment that keeps the road and bridge fund whole.

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House Minority Leader Craig Ford (D-Gadsden) asked, “What does that mean?”  The underlying legislation took $1.3 million from ALDOT and the county commissions this amendment restores that but would still be a tax increase.

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Rep. Alan Baker (R-Brewton) announced his support for the bill and thanked Henry for his diligence.

Rep. Ford said that the farmers are still getting affected. The seed stores are still affected.

The Amendment was adopted Ford I still go back to the point that manufacturers like Mercedes don’t buy this by the drum they buy them by the tanker truck.  We offer manufacturers incentives to come here and we are stabbing them in the back on the back end.

The committee voted to give the bill a favorable report, with three Republicans reversing their vote from Wednesday.  Rep. Phil Williams (R-Huntsville) still voted “No.”

House Minority Leader Craig Ford issued a written statement afterwards reprimanding Republicans on the Alabama House of Representatives Ways and Means – Education Trust Fund Committee for going back on their pledge not to raise taxes and voting to pass a bill that would raise taxes on lube oil by 5,960 percent.

Rep. Ford said, “Yesterday they were opposed to the tax increase. Today they were for it,” said Ford. “They campaigned on a promise of not raising taxes. Today, all but one of them broke their word and voted to support a 5,960 percent tax increase. I guess someone must have gotten to them during the night.”

House Bill 587 is part of the Mike Hubbard tax and Indian gaming package that was released on Tuesday. The bill would change the tax on lube oils from an excise tax to a sales tax. Currently, the tax on a 55-gallon barrel of lube oil is $3.30. Collins’ bill would increase that tax to an estimated $200 per barrel; an increase of 5,960 percent, after county and city sales taxes are added to the State sales tax.

Lube oils are used in manufacturing and farm equipment, as well as motor oils and other commonly used lubricants.

Rep. Ford said, “This is a tax that gets passed on to the consumer. That means when you go to buy groceries, the price of fruits and vegetables will go up because the costs to farmers will go up.”

Ford also noted that the tax could have a negative impact on economic growth and development in the State.

Rep. Ford said, “This is going to hurt their ability to expand, and it will definitely hurt the state’s ability to recruit new business to Alabama.”

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