Georgia Contemplates Ending "Birthday Tax" on Cars
That’s the annual Peach State tax on cars. So eliminating it’s a good thing, right? As someone who can’t find their way around a calculator, I depend on The Atlanta Journal Constitution to tell me if the proposed elimination of a yearly property tax on autos works is a good thing or a bad thing. Only I’ve read the article and I’m still not sure.
Backers of a state House plan to ax the annual birthday tax on cars are confident most Georgians support what they’re doing.
But the bill they passed Thursday, which replaces the current taxes on cars with a big one-time title fee, is getting mixed reviews. Gov. Sonny Perdue, who would have to sign any birthday tax legislation lawmakers approve, said Friday that parts of the plan appeared “convoluted.”
“I’m still trying to digest the purposes of that, of how it all would work,” the governor said.
Not to coin a phrase, no shit.
Under the proposal, Georgians would continue paying the annual property tax on cars and trucks they now own. But, starting next year, they would not have to pay property or sales taxes when they buy a new or used car. Instead, they would pay a title fee of 7 percent on the value of the car, up to $2,000 [the title fee, not the value of the car].
William Morie, president of the Georgia Automobile Dealers Association, said the change could generate sales from people who don’t want to continue paying property taxes on cars.
“People might do the math and figure out they are better off buying a car,” Morie said.
In fact, Rice, the Gwinnett County lawmaker, is so sure it will spur sales when it takes effect next year that he’s worried that people might wait to buy cars until then.
“We’ve got some issues that have to do with what happens in the interim between July 1 and January 1,” Rice said. “We’re not trying to kill all the dealerships in Georgia for the next six months. They’ve got enough trouble as it is.”
While dealers might be helped, the bill would initially increase the cost of buying a car from a private individual. Under the bill, people who buy a car from a family member, neighbor or someone who placed a classified ad would have to pay the new 7 percent fee on the car’s value.
That has raised a red flag for some Georgians questioned by The Atlanta Journal-Constitution about the proposal. Lawmakers said there were about 900,000 person-to-person car sales in Georgia last year.
David H. Underwood, 55, a photographer from Lilburn, said he would not support a tax on private sales. “New taxes during this bad economy will only hurt the recovery,” he said.
Calvin Stevens, 62, a small-business owner from Decatur, called it, “One of the biggest tax increases to hit Georgia consumers in a very long time.”
Ah. And it gets worse. I think.
Under the bill, someone buying a $25,000 car would pay a $1,750 title fee. If they paid a 7 percent sales tax, the cost would be the same.
The purchaser of a $75,000 car would pay $2,000 under the House proposal. If they, instead, had to pay a 7 percent sales tax at a dealer, they’d fork over $5,250.
Charles Wike, 41, of Cumming said the proposal isn’t structured equitably.
“While I hate paying the tag tax, I do not feel this fairly represents the average person,” he said. “Capping the cost at $2,000 means those who purchase an expensive car don’t pay a fair share as those purchasing a cheaper car.”
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I think something is being overlooked. The Title tax is 7%, this is "in addition" to the 7% sales tax, not instead of. So right off the bat, you will pay a total of 14% of the purchase price, with the Title tax not exceeding $2000.00. Here's the kicker, most people finance cars, take that up to $2000 and mutliply it by the 8% interest paid on the car loan, compound it for 5-6 years, and now that tax just came to approx. 900.00 in interest. The only people making out are the tax collectors and the banks..... as usual....go figure.....
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