The state House overwhelmingly backed legislation that used-car dealers say would increase title taxes for Georgians buying their vehicles by an average of about $300.
Supporters of the legislation say the increase would be closer to $150.
The move came a day after legislative leaders held a Capitol press conference to announce plans to cut state income taxes.
On Wednesday, the House voted 125-41 for House Bill 327, a measure designed, in part, to equalize car taxes and cut the cost people pay when they move into the state and register vehicles.
The vote came a day after Gov. Nathan Deal and legislative leaders announced they will seek to lower the maximum state income tax rate Georgians pay. The legislation is expected to be before the House for a vote Thursday.
Under HB 327, used-cars buyers would be charged the motor vehicle tax on the sales price of the car or truck sold by a dealer.
New cars are currently taxed based on sales price, whereas used cars are taxed at the lower “book value.”
So, if somebody buys a used car for $10,000 and owes the current 7 percent tax, but the state values the vehicle at $8,000, that person pays the taxes on the $8,000, not on what he or she paid for it. The difference in taxes would be $140 in that scenario.
A financial accounting of the proposal, which passed the chamber last year but stalled in the Georgia Senate, estimated it would increase state and local taxes by $162 million to $178 million next year if it becomes law.
However, HB 327’s sponsor, state Rep. Shaw Blackmon, R-Bonaire, said his legislation also cut the tax rate from 7 percent to 6.75 percent for all vehicles, and reduces that increase by about $60 million.
He called the special basis for figuring taxes on used cars “a carve out.”
“If you want to lower the rate on all motor vehicle sales, this bill will do that,” Blackmon said.
Under the bill, new-car buyers would pay less in taxes because the rate would decrease and the basis for the tax — the sales price — wouldn’t change.
But that doesn’t do much for Georgians who make a living selling only used cars.
“We are disappointed in the House passing this massive tax increase on all used-car consumers yet again,” said Mo Thrash, a lobbyist for used-car dealers.
The fight comes out of changes lawmakers made in 2012 when they eliminated the “birthday tax” — or property taxes — on cars after Georgians buy them. That legislation eliminated sales taxes as well, replacing them with a new title tax.
During committee hearings, Ben Jordan, a lobbyist for the new-car dealers, called the bill “an improvement in tax policy.”
The new-car dealers — including some who also sell used cars — and businesses that only sell used cars have battled over the issue at the Capitol for several years.
One of their weapons has been the checkbook. The used-car dealers credit Lt. Gov. Casey Cagle, the Senate’s president and a leading candidate for governor this year, with stopping the vehicle tax legislation in the Senate in the past, and they are hoping he comes through again in 2018.
During the six months leading up to the start of the session, about 75 auto dealers — some who back and some who oppose the legislation on car taxes — contributed about $145,000 to Cagle’s gubernatorial campaign.
“We look forward to Lt. Gov. Casey Cagle and the Senate once again stopping the tax increase on all used-car consumers,” Thrash said, “as they have done in the past.”
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