Georgia House Bill 340 To Further Increase Your Tax Bill On Used Car Purchases

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used car tax - Ga House Bill 340

A classic tale of unintended consequences or as granny might have said, “oh what a tangled web we weave, when first we practice to deceive.” For my fellow Georgians who buy used cars and trucks, this sad travail likely affects your pocketbook so if you’re inclined, read on.

In Georgia prior to 2013, a private citizen could sell a car to another Georgian without paying a sales tax. That’s right, only dealer’s collected that. Also prior to 2013, you’d just pay an annual tax to get your vehicle tag, called ad valorem, around your birthday. Mine was typically a couple hundred dollars. The ad valorem tax would gradually decrease each year as your car got older. This worked well for decades.

But Georgia car dealers especially those selling used cars grumbled about “lost sales” and “unfairness” due to this arrangement and eventually conspired with our legislators to pass a bill that took away Georgian’s right to sell cars to one another tax-free. The first time it was tried was in the ‘90s. It didn’t work because of consumer backlash and the bill was quietly repealed soon after. So they tried it again but this time it was packaged in terms that made it seem to be a good thing especially to a general public not paying close enough attention. And in 2012, H.B. 386 passed.

As many of you may know by now, the new law requires any used car buyer who goes to the tag office to get a license plate and title for a used car they just bought from a private citizen, to pay essentially a sales tax of 7% of the vehicles book value. And it’s not just current residents who get hit. Those who just moved to Georgia get a rude shock when they go to get their car titled and registered here. Boom! A fee/sales tax of 7% in the first year on a vehicle you already own just to get a Georgia license plate; welcome to Georgia.

Why is this bad for Georgia residents? Aside from yet another tax to pay of several hundred dollars or more, this change places a much bigger financial burden on the buyer by essentially accelerating all those ad valorem payments that had been spread out over the years of ownership, into a one time, lump sum up-front payment. And under the new law, you still have to pay a small tag fee every year on your birthday.

Flash forward to 2017 and the worm has turned. Used car dealers are up in arms that House Bill 340 will now allow counties to assess the 7% on used car transactions according to the amount on the vehicle’s Bill of Sale, not just the book value that was typically lower. GIADA (Georgia Independent Automobile Dealers Association) spokesperson Paul John says this projected $200 million increase threatens not just used car sales but their member’s businesses. They’ve even resorted to using the buying public’s plight as an argument against the change. How ironic given this very same group lobbied to burden citizens with more tax just a few years ago by eliminating the private sales exclusion.

For used car dealers it seems the unintended consequences of all this are; buyers when faced with the prospect of an increased vehicle sales tax will buy less expensive cars and trucks which hurts dealer revenue; buyers negotiating harder for better sales price and terms which lowers dealer profit; owners keeping vehicles longer to avoid having to pay another, growing vehicle sales tax any sooner than they have to. By creating a legitimate incentive to postpone trading in or up, dealers repeat customer sales are slowed.

Adding to the intrigue, new car dealers eager to find ways to write more car leases on increasingly expensive cars to make them affordable to a larger number of shoppers, have had placed in H.B. 340 measures to cut in half the taxes on new vehicle leases. This amounts to a projected $70 million in lost tax revenue if it passes. On top of that is another $50-60 million in lost revenue if the “Welcome to Georgia” title and the registration process is modified in response to citizen outcry.

To have your voice heard on this topic, contact your State Senator quickly. H.B. 340 is in the Georgia State Senate awaiting review and vote. https://openstates.org/ga/legislators/GA…

This appears on NextDoor as posted there, and courtesy here, by nieghbor Craig Lindberg

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