North Dakota tribal leaders seek to restore vehicle tax exemption
Lonna Jackson-Street, chair of the Spirit Lake Nation, speaks during a summit between state and tribal leaders on June 25, 2024. She testified last week in support of a bill that seeks to restore a motor vehicle excise tax exemption for tribal citizens. (Mary Steurer/North Dakota Monitor)
A bill in the North Dakota House seeks to restore a state tax exemption that some tribal leaders say was unfairly changed two years ago.
All enrolled members of North Dakota tribes used to be exempt from paying motor vehicle excise taxes when they bought a vehicle in the state.
Up until a 2023 law change, auto dealers would deliver vehicles to the five reservations that share geography with North Dakota.
A 2023 bill supported by tribal leaders and the Automobile Dealers Association of North Dakota sought to eliminate the need for the deliveries, which also were to tribal members living away from the reservation. The bill as proposed clarified that North Dakota tribal members, whether they lived on or off a reservation, are exempt from paying tax on the vehicle purchase.
But the law that eventually made it on the books was very different. A Senate committee approved an amendment from Rep. Ben Koppelman, R-West Fargo, that eliminated the tax exemption for tribal members living outside the boundaries of a reservation. Koppelman said at the time the exemption was unfair to North Dakotans who aren’t tribal citizens.
When the 5% tax took effect, it came as a surprise to many tribal citizens when they went to purchase a vehicle, according to testimony to a legislative committee last week.
“Our tribe has received incessant complaints about this change in policy,” Alysia LaCounte, general counsel for the Turtle Mountain Band of Chippewa, told members of the House Transportation Committee.
House Bill 1521, under consideration this year, would restore that tax exemption for all tribal members, regardless of where they live in North Dakota.
Rep. Jayme Davis, D-Rolette, one of the sponsors, said the tax places an undue financial burden on tribal members who live off of a reservation, often out of necessity for jobs, housing or education.
After the law change took effect, Davis said she got calls from families who had planned to buy vehicles for their college students, but the tax became a barrier.
“For some, yes, this may be little to nothing, but for them, it might as well be a million dollars, because they couldn’t afford it,” Davis said.
Tribal leaders also objected to the process in 2023, which they say lacked meaningful consultation with tribal nations.
“The changes that were made without input from the very people they impact undermine the trust that is essential to a strong government-to-government relationship,” Lonna Jackson-Street, chair of Spirit Lake Nation, told the legislative committee.
She added that tribal citizens already pay federal and tribal taxes.
The House Transportation was not receptive to the bill, unanimously approving a “do not pass” recommendation.
Koppelman, a member of the committee, said the 2023 amendment closed a legal loophole.
A 1992 attorney general’s opinion said a tribal member who lives off of a reservation does not have to pay excise tax if the transfer of the vehicle title occurs on the reservation.
Members of the committee also voiced concerns about protecting taxes that support roads and issues of fairness.
Koppelman questioned why a West Fargo resident who is a tribal member would not have to pay motor vehicle excise tax but his neighbor who is not a tribal member would. Koppelman proposed an amendment to eliminate motor vehicle excise taxes for all North Dakotans, but the committee rejected his proposal.
The bill does not have a fiscal note estimating the financial impact, though the committee is seeking one. Koppelman said he estimates it would cost the state about $2 million for 2025-27 based on figures obtained from the North Dakota Department of Transportation.
The bill is expected to go to the House floor this week.
Davis and Rep. Lisa Finley-DeVille, D-Mandaree, also a sponsor of the bill, voted in 2023 in favor of the bill that removed the tax exemption. Davis said last year they did so only because they thought they’d have a chance to advocate for amending it.
Meanwhile, a separate bill that has a hearing on Friday would require a new process of tribal consultation during legislative sessions. House Bill 1455 would require the director of the Indian Affairs Commission to review each bill and consult with tribal chairs on matters with tribal implications. The hearing is at 10 a.m. Friday before the House Political Subdivisions Committee in Room 327B of the Capitol. Testimony can be submitted online until 8 a.m. Friday.