Georgia used-car dealers oppose bill they say could boost title taxes

The measure, sponsored by state Rep. Shaw Blackmon, R-Bonaire, does several things to streamline changes made a few years ago when lawmakers changed how motor vehicles are taxed.

But the battle between car dealers is over a provision that essentially would charge the 7 percent tax on the sale of a used car based on the sales price or the state’s book value of the motor vehicle, whichever is higher. Generally, the sales price is higher.

Currently, according to backers of the bill, new cars are taxed based on that formula, whereas used cars are taxed at the typically lower book value.

Lobbyists for the used-car industry say the change amounts to a tax increase for car buyers and could hurt the industry.

State officials said they have not completed a fiscal note on the bill, so it’s unclear how much more money the state would raise from the change.

Paul John, the executive director of the Georgia Independent Automobile Dealers Association, said changes in the law in 2012 were made to ensure that all used-vehicle transactions were taxed the same way.

“At this point, tax revenues for used-car transactions in Georgia are at record levels and show no indication of diminishing,” he said in a statement. “To justify a massive tax increase, however it is generated, cannot be justified.”

“This will greatly harm the 5,000-plus Georgia independent licensed dealers and all used-car buyers, and any idea that can do serious harm to a viable industry must be rejected by the Georgia House of Representatives,” he said. “In its current form, HB 340 ensures that every consumer in the state of Georgia pays the highest tax on any used-vehicle purchase! Period!”

But Chip Lake, who is working with the Georgia Automobile Dealers Association, said he doesn’t know of another state that differentiates in how it taxes new and used cars

“We are arguing that this is not an increase,” he said. “The tax rate remains the same.”

Even opponents of the bill say some dealers have “gamed the system” by artificially inflating the value of trade-ins but then having the car that’s purchased taxed at the book value. They also say there are other ways to fix the problem without forcing customers to have to pay higher taxes.

Lake said the fight is not just one between new-car dealers and used-car dealers because many new-car dealers also sell used cars.

Both sides of the debate are familiar to members of the House Ways and Means Committee, as well as to members of the General Assembly in general. How to tax the sale/purchase of cars has been debated for decades.

Auto dealers lobbied for more than 20 years before succeeding in persuading lawmakers in 2012 to phase out sales and property taxes on cars and replace them with a title fee. People who haven’t bought a car in recent years still pay property taxes on their vehicles.

Both sides have long been heavily involved in supporting lawmakers’ campaigns. Combined, the Georgia Automobile Dealers Association and the Georgia Independent Automobile Dealers Association have contributed about $600,000 to the campaigns of lawmakers and top state officials in the past five years.

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