Next Story

Georgia governor slams ‘religious liberty’ change to adoption bill

Boost in Georgia tax on used-car sales advances


A key Senate committee backed legislation Monday that could mean a $200 million-a-year tax hike for used-car buyers.

Supporters of House Bill 340 — which is backed by new-car dealers — view it as cleaning up a loophole that currently allows used-car dealers to get an unfair competitive advantage on taxes and to sometimes scam the system.

The Senate Finance Committee approved the bill by state Rep. Shaw Blackmon, R-Bonaire, after a lengthy discussion, but it put off debate on several other major bills on its agenda until Wednesday. Included among the bills delayed are measures to lower the maximum state income tax rate and to make e-retailers and ride-share companies such as Uber collect sales taxes.

Who ultimately wins one of the General Assembly’s hottest business battles — over how cars are taxed — probably won’t be decided until the final days of the General Assembly’s session. The measure now goes to the full Senate for a vote.

State estimates say that by fiscal 2019 — the first full year the law would be in effect — the proposed changes in how used cars are taxed could mean an extra $237 million in title fee payments. That could rise to $268 million by 2022. Those numbers may have changed as the bill has moved through the legislative process.

Another part of the legislation would lower the bill on the same tax to those who lease cars, cutting their tab by up to $74 million in 2019, a number that could grow to $106 million by 2022.

Combined, the Georgia Automobile Dealers Association (new-car dealers) and the Georgia Independent Automobile Dealers Association (used-car dealers) have contributed about $1.1 million to the campaigns of lawmakers and top state officials in the past decade.

Lt. Gov. Casey Cagle, the Senate president, plays a key role in what gets passed in the session’s final days, and his campaigns have received more than $31,000 from the new-car political action committee, which supports the bill. The car dealership PAC is one of Cagle’s largest political backers.

The lobby for used-car dealers, which opposes HB 340, has contributed at least $4,500 to Cagle.

Under HB 340, used-cars buyers would be charged the 7 percent motor vehicles tax on the sales price of the car or truck sold by a dealer.

Currently, new cars are taxed based on that formula, whereas used cars are taxed at the typically lower book value.

So, if somebody buys a used car for $10,000 and owes the 7 percent tax, but the state book value on the vehicle is $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.

The tax rate is currently lower for people, often with bad credit, who buy from used-car dealers who extend them credit. Those dealers have the potential to make good money off the interest.

The bill would have charged them taxes based on the higher sales price, rather than the book value, but some committee members objected.

“These are the people struggling the most trying to get a car to get to work,” said state Sen. Mike Williams, R-Cumming. “There is currently a tax break for the working poor, and if we pass this bill, we will eliminate the tax break for the working poor.”

During Monday’s debate, committee members stopped to ask officials with the used-car industry what they thought lawmakers should do about sales where credit is extended. An industry official responded that the committee should leave the law as it is, which would allow such buyers to pay the lower tax rate based on the lower value.

So that’s what the committee did, amending the bill to maintain the status quo.

The Finance Committee also approved a reconstituted version of a House bill that would increase the benefit of donating to rural hospitals.

Lawmakers approved a measure last year that gave Georgians income tax credits worth 70 percent of their donation to struggling rural hospitals. Backers found that they needed to up the incentives because so few people agreed to donate, so the new bill increases the value of the tax credit to 80 percent.

Lawmakers have made $180 million in tax credits available over the next three years to people who donate to about four dozen rural hospitals.


Reader Comments ...

Next Up in Georgia Politics

Georgia resets rules on voter challenges after a town got it wrong
Georgia resets rules on voter challenges after a town got it wrong

A recent string of problems over how local officials challenged the registration of Georgia voters can be summed up in the curt, one-page letter that arrived mid-July at Jennifer Hill’s home near Savannah. Even though she had lived there for three years, the tiny town of Thunderbolt wanted Hill to prove her residency because her name did...
Lawmakers begin talks about how to replace Georgia’s aging vote system
Lawmakers begin talks about how to replace Georgia’s aging vote system

A handful of lawmakers began the discussion Friday about what it might take to move Georgia to a new election system, an important but incremental step toward replacing the state’s aging voting machines. The meeting of the state House Science and Technology Committee represents a start. Any decision will likely take a few years and, depending...
Graham-Cassidy obscures deadlines for other key actions on health care
Graham-Cassidy obscures deadlines for other key actions on health care

Nearly one hundred and fifty million dollars to keep Georgia hospitals’ indigent care afloat. Funding for the PeachCare program that along with Medicaid covers about half of Georgia’s kids. Clear answers on Obamacare subsidies that Blue Cross said it needed to keep selling individual plans in metro Atlanta. Those are some things that Congress...
Georgia ethics panel to begin auditing candidates in governor’s race
Georgia ethics panel to begin auditing candidates in governor’s race

After years of mainly investigating issues raised by Georgians, the state’s ethics watchdog agency plans to aggressively audit campaign filings from all the major statewide races coming up. Stefan Ritter, the executive secretary of the ethics commission, said that while some details still have to be worked out, the agency will be auditing the...
From the Right, the advice for Trump is to try diplomacy
From the Right, the advice for Trump is to try diplomacy

A roundup of editorials Friday looks at the idea that kicking North Korea out of the UN would go a long way toward helping the current situation, and that having President Donald Trump negotiate instead of threaten would be the best move to make.  Here are some opinions from the Right. From The Wall Street Journal: If the world community is serious...
More Stories