Legislature: Some say killing ‘birthday tax’ is no gift

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.”

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“I’m still trying to digest the purposes of that, of how it all would work,” the governor said.

House Motor Vehicles Chairman Tom Rice (R-Norcross) acknowledged that House Bill 480 will have to be tinkered with as it moves to the Senate for

consideration over the next few weeks.

But he predicted that “over 80 percent of Georgians are going to be happy with this.”

State House leaders have been trying to do away with property taxes on cars for years. The levy is called the “birthday tax” because it is due on the car owner’s birthday.

Last year, a bill that would have eliminated the tax passed the House but couldn’t get the blessing of the Senate.

This year’s legislation, which passed the House 133-39, is seen as a sort of stimulus package for car dealers. It also is being sold as a leveling of the selling field between dealers and those who make person-to-person, or “casual,” sales.

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.

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.”

Some objected to the cap on the title fee, saying it favored people who buy expensive cars.

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.”

Rice said the cap is in place in part because lawmakers want to limit how much money the government takes in from the title fee. Local governments and the state would take in hundreds of millions of dollars more under the plan, money that supporters say will help fund the state’s trauma care system, among other things.

But Rice added that the cap also provides an incentive for people to purchase more expensive cars under the idea that it helps the economy.

“The cap was designed … to induce people to buy up,” he said.

Some like the idea.

Russell Bell, 50, a Powder Springs software application tester, said, “I can see it making it a little easier for some to keep a car. It would have saved me money on my vehicle.”

Justin Martin, 24, a Dallas, Ga., student, wants the bill to go even further. He thinks lawmakers should eliminate the property taxes on cars without adding the title fee.

“More money in the hands of Georgians and fewer taxes on things we buy would spur the local economy greatly,” he said.