House votes to axe the birthday tax
The House overwhelmingly backed legislation Thursday to phase out property taxes on cars, known as the Birthday Tax because it’s due on the owner’s birthday.
However, some Democrats argued that the bill, which passed 133-39, would amount to a tax increase on average Georgians who don’t use dealers to buy cars.
Under the legislation that still needs Senate approval, people who buy vehicles starting next year won’t pay property taxes on those cars. They also wouldn’t pay a sales tax they’d normally pay if they bought from a dealer. To replace those taxes, all buyers will have to pay a fee of 7 percent, up to a maximum of $2,000, when they title their vehicles.
Georgians who keep their present cars will still have to pay the annual property taxes until they buy another one.
Currently, there is no sales tax on person-to-person, or “casual” sales of cars, so the title fee will capture money from those buyers.
House Motor Vehicles Chairman Tom Rice (R-Norcross) said there are 900,000 person-to-person or “casual sales” of cars and trucks each year in Georgia.
“This is going to be fair to every one of us who buys a car,” Rice said.
Some Democrats agreed.
“This is more fair to more people,” said Rep. Mary Margaret Oliver (D-Decatur)
Rice said the title fee will raise more than the current system, providing extra money for local governments and $100 million to $150 million for a new state trauma care system.
House Minority Leader DuBose Porter (D-Dublin) said that extra money would come from “average Georgians” who buy cars from individuals, not dealers.
“How much money is this going to generate? A whole lot,” Porter said. “Where is it going to come from? Regular folks.
“This is a great deal if you’re going to buy a $150,000 Mercedes because all you’re going to do is pay the $2,000 (fee),” he said. “If old granddaddy wants to give his son a pickup truck, he’s going to pay a tax.
“We’re creating a brand-new tax that’s going to generate a heck of a lot of new money off of working folks in this state.”
House Majority Leader Jerry Keen (R-St. Simons Island) responded, “It is a tax increase for people who have been doing their transactions under the table.”
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245 comments Add your comment
Taxed to death
March 12th, 2009
1:42 pm
So the only way to avoid the tag tax is to buy a new car. Oh boy what a deal thank legislators. You figured out a new way to keep one tax and add another. This will be just additional taxes which we already have way to many. You Gold dome idiots continue to be out of touch with anyone but the rich!
Melanie
March 12th, 2009
1:43 pm
Since when is selling privately owned property to a willing buyer considered “under the table”? How did dealers become the only “legitimate” way to sell a car?
I wonder how much the car dealerships spent to make this crappy piece of legislation happen? I’m surprised they could afford this, considering how many are going out of business lately. At the rate they are closing, no Georgian will see the tax benefit, as the only people left to purchase from will be the “under the table” individuals.
Darrell
March 12th, 2009
1:52 pm
Take away having to pay every year and no sales tax for a 7% one time fee. Right now your sales tax rate is based on what county you live in. Fulton is at 8% now. No that’s not a tax increase for most people. Even those who are buying from individuals are having to pay a yearly tax when they get the tag so a one time fee will be less for them too.
Yankee
March 12th, 2009
1:52 pm
Because of a job change we had been looking to move to Columbus. Now Alabama’s starting to look good.
Drew Scoggins
March 12th, 2009
1:57 pm
Thank God! About time something was done about this. Thank you Legislature
Rollo Tomasi
March 12th, 2009
1:59 pm
Well, thanks a lot republicans. You have screwed over the common folk again. I need to go buy some more vasaline on the way home.
DUANE
March 12th, 2009
2:02 pm
here come the Great Depression 2. Thank you lawmakers.
Annoyed
March 12th, 2009
2:04 pm
Considering many folks roll the tax of a new car purchase into the financing, I would love to know how this will be addressed at the tag office. Maybe the dealers should have thought about the fact that not having the extra 2 grand sitting around will keep customers off the lot even longer. Maybe we can all get a $2,000 bailout from the Messiah in Washington to use towards a new car.
bull-gator
March 12th, 2009
2:04 pm
a-holes
jsc3
March 12th, 2009
2:05 pm
The legislators are not out-of-touch, they just don’t care. It is all about money. Since the economy went down the toilet, tax collections are down so they need to find a way to raise money. Without money, how are they supposed to buy votes so they can stay in power? It doesn’t matter federal or state government, the game is all the same – get more money. Of course, all you people who demand that the government pay for this, that, or something else, for your use, you are accomplices in this theft from the people.
kevin
March 12th, 2009
2:07 pm
Great, I had been holding off buying the $150,000 mercedes. Now I don’t have any more excuses.
Rob
March 12th, 2009
2:09 pm
What this does is give the rich people a a tax cut while the poor, low income, and middle class pay the bulk of the taxes. People buy cars from private sellers to save money now the government wants to steal your savings. Someone who buys a $30,000 car shouldn’t have to pay the same tax as someone who buys a $100,000 car. They say it eliminates yearly car “birthday” tax, it doesn’t. instead of paying small amounts yearly you would pay several years worth in one lump some. If you like to replace your car every 3-4 years you keep paying over and over. So my guess would be that people would start to keep cars longer which would add to the decline in auto sales.
Retired Rehired
March 12th, 2009
2:10 pm
Thanks politicians……a tax decrease for people buying expensive new cars and a tax increase for middle and lower income Georgians more likely to buy used cars from individuals.
Jeff
March 12th, 2009
2:10 pm
And don’t forget that the “birthday tax”, aka ad valorem tax, was deductible on your Federal income taxes. This new “fee” won’t be.
The Snark
March 12th, 2009
2:10 pm
So, Jerry Keen, buying a used car without paying a tax is a “transaction under the table,” even though no law currently requires me to pay a tax? You are a real piece of work, Jerry. I look forward to voting against you when you try to put your sorry butt in the Governor’s mansion.
John
March 12th, 2009
2:11 pm
“Georgians who keep their present cars will still have to pay the annual property taxes until they buy another one.”
So the real losers are the ones who are keeping their cars they may have bought from a dealer this year or earlier having paid the original sales tax and now have to continue paying the annual tax. I need a new car so why would I buy one now if I have to pay 7% for my county anyway and then I would have to continue paying the annual tax. I’ve just about had with this government!
steve
March 12th, 2009
2:13 pm
You have to wonder if these elected idiots really think about the big picture before they speak/vote ……
WHAT?
March 12th, 2009
2:13 pm
How is buying a car from an individual a transaction under the table? You still pay the state to transfer the title and to get a tag every year so the state knows you the bought the car! Nothing under the table about it! Jerry Keene is fine man for inferring that anyone who doesn’t buy from a dealer is a crook and trying to cheat the government! You, sir, ARE A CLOWN! And I hope the residents of ST. Simons Island remember this next election.
Jeff
March 12th, 2009
2:14 pm
Nice! This legislation will fly under the radar and pass because most Georgians won’t see it. Obviously, dealerships are giddy over this bill because it will eliminate the only advantage of purchasing a vehicle from an individual. This is just another example of our disconnected politicians looking under every stinking rock to make sure they get a piece of the pie. How irresponsible…shame on those who voted for this bill. Please…please make sure everyone reaches out their Senators to complain. THIS WILL IMPACT EVERYONE EXCEPT DEALERSHIPS…SO WHO IS BEING REPRESENTED HERE?
no surprise
March 12th, 2009
2:15 pm
just another example of people coming up with crap to justify their jobs/salary. creating new drama to give them reason to get paid.
thanks for working for the people who gave you the jobs! bull&$*%
ab
March 12th, 2009
2:15 pm
Well this doesn’t help the people with cars that are paid for and plan to keep them for awhile, this is a terrible idea.
ab
March 12th, 2009
2:15 pm
Enter your comments here
bobo
March 12th, 2009
2:15 pm
Think I’ll just sell my truck to my wife for a dollar and pay the 7% tax, buy my wife’s car from her and pay the 7% on that dollar and be done with taxes on my vehicles. Like the lottery, it’s a tax on the stupid.
James
March 12th, 2009
2:16 pm
This will make it more expensive to buy a new car-by 7% upfront. This will have a negative impact on new car sales, which already suck. And since I am already paying the automakers bailout – I think this is just ridiculous double dipping out of my pocket!!!
Jeff
March 12th, 2009
2:16 pm
“Drew Scoggins comment,” Are you serious? Why not reveal which dealership you work for? Probably a Used Car salesman with that comment!
Native Georgian
March 12th, 2009
2:16 pm
Yet another way to sour the economy. Now car sales will go down as people leverage the extra fee into the costs of buying a vehicle. Less car sales equals less taxes. Then we’ll be right back to another birthday tax to make up for the losses. Why fix it if it’s not broken? IF it is broken, then that means it’s not making enough money so the fix is to find a way to get more money. Let us BREATHE through the recession before loading us up with new stuff!!!
Brad
March 12th, 2009
2:18 pm
You can hear the pride in the statement “We’re creating a brand-new tax that’s going to generate a heck of a lot of new money off of working folks in this state.” can’t you. Another politician happy
he found a way to stick it to us. All people take notice-If we keep allowing this to happen, they will
keep doing it.
James
March 12th, 2009
2:20 pm
no surprise, I agree. I would like to know what the legislative body actually accomplishes – seriously, an annual debate regarding Sunday Sales is a HUGE waste of tax dollars!!! And now this stupid idea – if you want to get around paying a tax – as suggested this happens in private sales – this is not the answer. I could sell my car for a buck and the buyer could pay 7 whole cents. If you want to get around a tax, there is always a way…
the evil rich
March 12th, 2009
2:22 pm
It’s always the evil rich, isn’t it. I bet you WANT to be the evil rich though, don’t YOU?
Jerry D
March 12th, 2009
2:23 pm
What a bunch of morons! Let me get this right??? What if I but a car that costs $28,500… 7% of that is $1,995…
We are not talking luxury cars here! Most people finance the tax, etc in with their car loan… but now I will have to pay the 7% up front… or is the tag office going to work out terms with us???
OK… so now, the avg “Birthday tax” on a vehicle that costs 28,500 is a little over $300 per year. At that rate, you would need to keep that car OVER 6.5 years to save any money! What percentage of people keep cars for more that 6 years??? VERY FEW!!!!
So, if you trade in within that 6 years, you are getting screwed more!
Basically, this is making the average person come out of pocket with a large amount of money that these days I am betting they do not have access to and it is also costing you MUCH more if you don’t keep you vehicle longer that about 6 years!
A-Holes!
Ben Dover
March 12th, 2009
2:23 pm
And we didn’t even get kissed first.
Disgusted with Lawmakers
March 12th, 2009
2:24 pm
This is the most ludacrous thing I have ever heard. Please… give us a break here. I am so sick of paying taxes, My husband & I have paid over $24,000 in taxes last year & we are needing to pay another $8,000.00. Not sure where we are getting the money from but ….??? I know no one cares.
2BFREE
March 12th, 2009
2:24 pm
Bobo, the tax (sorry they like the word “fee”)is based on 7% of the State’s value, not the selling price.
And everyone remember if you buy a vehicle, on average you will pay 7% twice. Once when you buy the vehicle, and when you have paid off your loan another 7% to perfect the title in your name only. Since the ad valorem tax is around 1.5% today (and deductible as someone pointed out)a new vehicle every 6 years of average value would be about breakeven. I figured this garbage would pass the House, but was disappointed it was closer.
Home Again
March 12th, 2009
2:25 pm
Well, just moved back here after being gone “up North” for 15 years. It was a shock to have to get three tags when I got here and pay all the fees. And then two months later they hit me again with all the b-day taxes. I thought “wow, what a racket!” Now that they have passed this law I see what they are really doing. They are trying to make everybody that moves into the state from “up North” feel comfortable and welcomed. Of course we are use to paying out the nose when we buy anything because we are from the great state of Taxaylvania. Obama is just a warm up for the real tax and spend politician, Ed Rendell. Get used to these stealth tax increases, more are on the way. This one they just decided to do in the public.
Brightest Bulb
March 12th, 2009
2:27 pm
The vote should go to the people and let us decide since we can’t all be politicians.
Jeff
March 12th, 2009
2:30 pm
as a dealer thanks for all of you who think we invent this crap, I would be totally against this bill because then we will have titling problems because who has that kind of money to come out of pocket when they go to the tag office, where as now we can collect those taxes and put add them into the financing.
RG
March 12th, 2009
2:30 pm
So sell your car to your spouse for a buck and pay the 7% on that and at the same time eliminate the yearly fee. Works for me.
Flyin' Dawg
March 12th, 2009
2:30 pm
Do any of you people understand what is happening here? The 7% fee will replace sales tax when you buy a car and it will still be able to be financed with all of the other dealer fees. For some of you, it will save money- Fulton for instance. If you are concerned about the income tax savings for paying a $200-$300 per year in ad valorem tax, then may I suggest you find a better accountant. Some of you don’t even think before you type. Now as far as the guy who is going to sell his car to his wife, that is a great idea. Let me know if it works.
JM
March 12th, 2009
2:31 pm
So what happens if I sell the car to my wife for $1. Does the state get 7 cents in taxes?
hillarie
March 12th, 2009
2:31 pm
I am not clear here. It sounds at first like all currently owned vehicles are exempt from the new law. “Georgians who keep their present cars will still have to pay the annual property taxes until they buy another one.” Then it says it the fee will apply when buying a used car (aka a car exempted). Does that mean, after I purchase a used vehicle in which the previous owner was paying ad valorem taxes, now I pay the “7% fee” (7% of what, I wonder) and no longer pay the ad valorem taxes?
JM
March 12th, 2009
2:32 pm
RG we had the same idea, just 1 minute apart
Ima Nidiot
March 12th, 2009
2:32 pm
Bobo is a genius: I am going to sell my car to my wife for a dollar, and buy her car for a dollar, pay the 14 cents tax, and be done with ad-valorem tax. Seriously, is this legal to do?? Any tax attorneys lurking on here??
Deep
March 12th, 2009
2:33 pm
I agree with “ab” this is the worst idea ever! What are they thinking about in Washington?
Really?
Please tell me we’re getting “Punked”, Right?
They’re joking….Right?
Annoyed
March 12th, 2009
2:33 pm
Really?
Double taxation. How about that. Pulling us out of the recession. Thanks.
Ekim Eroom
March 12th, 2009
2:33 pm
When you purchase a car from a private seller you get to enter the sales price on the title. Do the math and reduce the purchase price of the car! Not so difficult.
Don
March 12th, 2009
2:34 pm
WOOOO BOYYY…what can we find to tax next…I bet the next thing you will want to tax is the boiled peanuts that you get from from folks selling them along side the road as you ride through the north Ga mountains….OOOPS….I’ve given them another idea…
Greg
March 12th, 2009
2:34 pm
Message to Politicians…
You are worthless pieces of dungheap. The whole idea of doing away with the annual fee was to help Georgians. All you have done is give Rich folks a tax cut (something that has not worked over the past 8 years) and piled it all on the Middle Class and Poor. But of course you do not care. YOU PEOPLE ARE RICH!!
So lets clarify: I keep my car and continue to pay or buy a new one and drop hundreds all at once. Do you think we are stupid. How about forgetting this sham and just keep things as they are!!
-Greg
PS. HOW ABOUT PAYING YOUR TAXES BEFORE YOU STICK IT TO US!!
Bunnie
March 12th, 2009
2:34 pm
Great! Thanks so much for making the tax burden fall even harder on the lower and middle class while letting drug dealers and other show offs cap their taxes on their Mercedes and BMWs! What a wonderful deal for Georgians who are already struggling with unemployment and the loss of home values! Aren’t we lucky to have legislators who have no qualms about taxing retirees and kids getting their first cars, but won’t for the life of them pass public safety laws banning the use of cell phones in cars like every other state in the union?
Ury
March 12th, 2009
2:35 pm
Well I guess this settles it.
No new car for me anytime soon and I guess I don’t have to worry about selling my old one now because the additional title fee will keep most people from wanting to buy it.
Why are our politicans all money hungry idoits?
Sense Common
March 12th, 2009
2:37 pm
Read the Bill folks. The 7% is based on the State’s value, not the selling price. Most Georgians will pay more under this Bill than they do now. The Representatives supporting this Bill has admitted as much. However what they don’t say (because they don’t know), is will the local schools and governments get enough of this to equal out what they get now. I don’t see how they can. In certain years there will be a surplus, but others a shortfall. Most years will come up short, so the county will need to raise other revenue sources, like your property tax.
Doug K
March 12th, 2009
2:39 pm
Man you’ve really got to hand it to the Republicans. This is just another tax dodge for the rich packaged in such a way as to get Joe Six-pack to support it. At a maximum of $2,000 this would essencially wipe out any taxes for an amount paid over $28,572. This means that when the rich buddys of these Republicans buy their $75,000 luxury cars, they will pay no more tax than I would for my little Toyota. Unless you’re rich, your a fool if you’re voting for these Republicans (and the idiot Democrats, like Ms. Decatur, who go along with this robbing the poor to give to the rich). I think it’s time to grap the pitchforks, and the tar and feathers.
RG
March 12th, 2009
2:39 pm
IMA…..I know this much…if you buy a boat even today, you have to get a tag for the trailer but you can get a seperate bill of sale for the trailer which does not include the value of the boat. An lets say you get a bill of sale for $50 for the trailer, you pay the tag fees based on that amount.
Home Again
March 12th, 2009
2:40 pm
Hi Hillarie and others. We had the came of tax in PA. You will pay the 7% on the sales price of the car. So if were to buy my used mustang for $9000 you are going to pay $630 to the state. And for all of you that think selling your car to your spouse will solve your problem, nope! They will use a value estimator on the car and even if you only paid $4000 for a 1998 Cadillac they will charge you 7% of the value guide of $7000, or $490. Happened to me in PA. I showed them the checks and the contract and they said “fergetbouit, you gonna pay the tax or you ain’t gonna get the tag.” You have not seen the last of taxes and fees, more are on the way!
Native Georgian
March 12th, 2009
2:40 pm
Simply put: The bill discourages new car buying which is HORRIBLE FOR THE ECONOMY!
Woogidy
March 12th, 2009
2:40 pm
Easy fix people. Every car is bought for $1. That’s 7 cents tax. So when you buy a car from an individual, give him a couple hundred extra bucks and write whatever you want in the box that says purchase price. They didn’t think about that. I am from Indiana and everyone does that there. We WIN!
Bob
March 12th, 2009
2:41 pm
Thanks for finding yet another way to tax us! I’m beginning to hate the state government. The republicans are killing us average folks. I bet the car dealers will LOVE this. I can barely afford to get by as it is and now these stupid republicans are going to hit me again.
David S
March 12th, 2009
2:43 pm
Juat when are we going to do away with all of these scoundrels? Cut government, cut government, cut government. When are these jerks going to get it????
Rollo Tomasi
March 12th, 2009
2:43 pm
Someone had a good point. We could write the old tax off on our taxes. Will we be able to write the new one off as well? Anyone know?
CD
March 12th, 2009
2:44 pm
This is a CRAPPY piece of legislation!!!!! I mean totally WTF.. this means when I buy my 16 yr old a car/truck and have the title xferred to his name when he is old enough we’ll be taxed for the title xfer. Where is the “under the table” dealing here. I’m paying cold hard cash to a dealer or individual citizen, paying my taxes, title and tags fees but this isn’t legit b/c I didn’t go to Honda or Toyota.. Come one. I am the regular run of the mill EVERYDAY Georgian. I can’t afford to pay that amount for each of my children, when I purchase them a car/truck. I’m home grown but do I need to leave the new tax me state?
the truth
March 12th, 2009
2:44 pm
so in order to avoid the 7% tax can I simply go to a neighboring state and buy my car there?
Mike
March 12th, 2009
2:45 pm
Why does goverment feel they must pass new laws and senseless legislation every year. Our legislature would be surprised to know how many people would be satisfied if they went to Atlanta each year and did nothing. Give the state of budget to work with every year and let the Legislators go back to thier regular jobs.
Sense Common
March 12th, 2009
2:45 pm
Another issue, if you current have a vehicle you are paying for that will be paid off after January 2010, you will have to pay 7% to have the title perfected (meaning to have the lien holder removed). Remember, 7% every time the title changes except for deceased spouses.
And because this is a title fee, a purchase from a dealer can be wrapped into the financing (heck if they can add their crooked DOC fees, they can add anything). Many times when you buy a vehicle out of state (to avoid the DOC fees), the dealer will calculate the sales tax for Georgia and put it in the deal and cut a check for the State. Dealers will be able to do that with this fee. However if you buy from an individual (which 20% of sales are), you as the owner will need to fork over that 7% to get a title. That may not sound much, but if someone with poor credit has worked hard to save $4,000 for that car up the street, they now have to save a little extra to cover the $318 tag and title fee (280 + 18 + 20).
Nick
March 12th, 2009
2:47 pm
Hmm…sounds like this bill will stiffle car sales for the rest of the year, why would you buy a car this summer or fall, when you can wait until Jan and never pay advalorem…i wonder what new car dealerships have to say about this…
Paul A
March 12th, 2009
2:48 pm
Unbelievable…. Wait until these A-Holes figure out a way to tax everybody for yard sales.
If I buy a ferarri I only pay $2000 for tax.
Everybody should just create bills of sale for $50 when they sell a car via private party. If we all pay with cash how can these morons get their $$$$ ?
What in the fu** is the legislature thinking? Who do these a$$clowns think they work for?
Keep the annual tag fee. I don’t like it but it’s better than this BS.
It’s about time for a revolution ya’all.
To the GA legislature – STOP SPENDING MONEY YOU IDIOTS. Live within your means… That’s what the rest of us have to do.
Everybody reading this article should call their state Rep. and start yelling at them!!!
NO MORE TAXES!!!!!!
Justin
March 12th, 2009
2:48 pm
This makes no sense!! When you buy a car you pay taxes on that car whether you finance or not you still pay taxes on that car. When you renew your tag every year you pay taxes on that car. So when you sell the car to an individual the taxes on that car have already been paid at the time of pruchase and year after year. This legislation sounds like they want to double tax a car that has already had the taxes paid on it. This sounds fishy to me.
Janice
March 12th, 2009
2:49 pm
i’m completely confused. penalize the person who does not incur more debt by continually purchasing a new car. i give up….i am from the north and we had tax on top of tax…but i’ll tell you, georgia is catching up with these taxes on stuff.
Home Again
March 12th, 2009
2:49 pm
sorry “the truth” but you can’t title it in another state and get a tag in GA. The tax is in effect when you try to title it here in GA. And you can’t title it in the other state unless you own property in that state. You got to remember, these are politicians and they are going to figure out how to make sure you pay the tax.
Lisa
March 12th, 2009
2:50 pm
I dont think this is replacing the current sales tax you already pay on the purchase. It is an additional “title fee”. Therefore you will pay 13-14% in taxes and “title fines” over and above the price of the car. If they think this will help the auto industry, think again. How buying from an individual got to be an “underhanded” deal I don’t know. Basically, the government needs car dealers to collect their “fines” so they want to keep people away from individuals. I think this is called a private sale versus going to a dealership which should be called a government sponsored sale.
Jeff
March 12th, 2009
2:51 pm
C’mon Folks get on the phone and start making some calls! I already called Mr. Cowsert who represents Walton County and expressed my opinion. His admin didn’t know anything about it. MAKE SOME CALLS…IT’S THE ONLY WAY WE’LL STOP THIS GARBAGE FROM HAPPENING!!!!
Unreal…
Sense Common
March 12th, 2009
2:53 pm
From HB480:
(A) A state title fee in the amount equal to the lesser of $1,000.00 or an amount equal to 3.5 percent of the value of such vehicle as determined under the uniform evaluation of all motor vehicles prepared by the state revenue commissioner under Code Section 48-5-442; and
(B) A local title fee in the amount equal to the lesser of $1,000.00 or an amount equal to 3.5 percent of the value of such vehicle as determined under the uniform evaluation of all motor vehicles prepared by the state revenue commissioner under Code Section 48-5-442.
From OCGA 48-5-442:
Each evaluation shall reflect the average of the current fair market value and the current wholesale value for all motor vehicles as determined by the commissioner.
The $1 scheme will not work folks, so forget about it.
As to income tax, only taxes based on the value of the vehicle is deductible (remember this is called a fee which is different from a tax in legal terms). Also an income tax deduction exist for sales tax, but that will be gone to. So no deduction, except from your checking account.
Atlanta Blue
March 12th, 2009
2:57 pm
1. The 7% title tax REPLACES sales tax. So if you buy from a dealer, you are better off if you live in Atlanta (8% sales tax), worse off if you live in Cobb (6% sales tax).
2. If you buy from an individual, NOW you are adding 7% to the price that wasn’t there before, but you are buying your way out of the annual ad velorum tax. For most people, the 7% one time fee would be greater than the annual ad velorum tax, as we are talking about a used car (which already has lower ad velorem taxes than a new car of the same model), and most people not holding a car for the 6.5 year break even point.
3. The tax will be due on the FAIR MARKET VALUE of the car you buy from an individual, not on the actual price paid, or that the state will require an arm’s length transaction. The $1 for your car, $1 for mine, won’t fly. Bet on it.
You will never convince me the auto dealers weren’t behind this one. Purchases from dealerships, where the title tax replaces sales tax, will be close to a wash. It’s the private sales that will be killed by this one. And if private sales of used cars goes down, who benefits? Oh yeah, the dealers!
hillarie
March 12th, 2009
2:59 pm
You can read the legislation here: http://www.legis.ga.gov/legis/2009_10/pdf/hb480.pdf
@Lisa: It _is_ replacing sales tax and ad valorem tax: “any motor vehicle for which a title is issued in this state on or after January 1, 2010, shall be exempt from sales tax .. and shall not be subject to ad valorem tax”
Tax Man
March 12th, 2009
3:00 pm
There are multiple ways this tax will effect people.
It will remove sales tax from car purchases. Obama’s stimulas plan recently allowed for an above line adjustment for sales taxes paid on “NEW” car purchases. But this phases out for higher income people which many republicans are. Now the state won’t have to conform to this new rule because there won’t be any sales tax on auto’s.
This new tax will be labeled as a “fee” and will not be tax deductible. This raises income tax revenues for the state as well although minimal.
The obvious target of this is lower income people who buy used cars from individuals. Republicans always champion their fair tax system but i do not see fairness in the fact that the guy who buys a $15,000 car will pay 7% and a guy who buys a $100,000 car will pay 2%.
Stephen
March 12th, 2009
3:01 pm
I am terrified by the reasoning ability of people on here. If you are capable of understanding what you read then you will understand that this replaces both the sales tax and the ad-valorem tax. It is NOT in addition to sales tax. The rate they are using, which is 7%, is equivalent to the sales tax rate for the vast majority of consumers and is capped at $2,000, while sales tax has never been capped. Yes, the more expensive the car you buy the more advantageous it is for you. But it is not hurting anyone buying a new, inexpensive car. The break is just not as large. The only people this hurts are those who are buying a used car from an individual and those people have a legitimate complaint. Also, do any of you really think you can sell your car for $1 to a friend or spouse and then buy it back for $1 and avoid the tax? I beg you to try that. You will pay the 7% fee twice to have the car retitled twice. They use the prevailing market price of the car if your transaction price is significantly reduced. That is same way they do the ad-valorem tax each year. That tax has nothing to do with your purchase price. It has everything to do with the value they assign your car.
OMG
March 12th, 2009
3:04 pm
I pay $200 every year for both of my cars. If I keep these cars for 7 years I have paid $1400 in taxes. Most people do not keep there cars this long. So lets say I have my cars for 3 years. I have paid $600. If I go by two new cars the maximum I will pay will be $4000 ($2000 for each car). I do not see how this is better for anyone. Thank you Georgia lawmakers for doing your job and making sure that the state is well funded by taking more of my money just like U.S. lawmakers.
Sense Common
March 12th, 2009
3:05 pm
GADA (Georgia Auto Dealers Ass.) and GIADA (Georgia Indenpendent Auto Dealers Ass.) was very much behind this Bill. However the Representatives lied when they said they had support from County Tax officials. They realize this will increase the cost to their taxpayers while decreasing the collections by the local governments. People know this one fact if you know nothing else. The people under the Gold Dome do not care if local governments survive or not or if the schools are properly funded. Their goal is to look good and possibly move to a higher elected position one day. Your local government cares more about school taxes and local taxes than anyone else and they fight hard to keep those funds at a local level. Try attending a State budget hearing and have your voice heard. Now go to a local school board meeting or county Commissioner meeting. You may not get your way, but your voice will be heard.
KEEP THE MONEY OUT OF THE STATE AND FEDERAL HANDS AND LET THE PEOPLE DECIDE!!!!
Ace
March 12th, 2009
3:05 pm
So you buy a $20,000 car, you don’t pay the 7% sales tax, so you save $1,400 and you have to pay a 1 time fee of up to $2,000 at the time you register your car. If you finance your car, I’m sure this will be rolled into the financing just like sales tax. In the end you will probably break even in 3-4 years, so if you hold onto your car you will benefit from this law.
What I have a problem with is that the state has not been collecting sales tax on these person-2-person sales for all these years, when in fact they should have collected sales tax at the time the title was transfered.
For those who itemize their taxes, I wonder how this 1 time $2000 fee can be applied towards both federal and state tax returns.
Old Dawg
March 12th, 2009
3:06 pm
OK Georgia Taxpayers!! You’ve seen what the idiots do when they get under the golden dome. Do all of us a favor and please vote the bastards out at the next election. It is past time to take our state back from the tax and spend crowd. If we don’t do something about this now, they will just continue to take and take until there’s nothing left. As former British Prime Minister once said, “the problem with socialism is that pretty soon you run out of other people’s money.
Gary
March 12th, 2009
3:07 pm
I hope every one that is affected by this bill will remember the names of the representatives who created the bill at ELECTION time! Vote their sorry A$$&$ out of office next election!! They should have gone last November but nope we just had to vote Republican to try hold on, well folks need to remember what happened to the rest of the country! Now it’s happening to Georgia! The “good ole boys” are gonna screw us royal before it’s all over! Stock up on lots of Vaseline for your wallet!
Sad Truth
March 12th, 2009
3:07 pm
I’m sorry to tell you, but if you read the actual house bill (HB446) in its current form online, then selling your car to your wife, etc. for $1 will not work as the 7% is based on the “uniform evaluation of all motor vehicles prepared by the state revenue commissioner under Code Section 48-5-442″. In other words, no matter what you purchase the car for, the government is going to charge you taxes on what THEY think it is worth. And I see no provision in the bill for actually “phasing out” the ad velorum tax for those of us that already own our vehicles. We will be required to pay ad velorum taxes on our current vehicles until we purchase something different. So even if you purchase a car for $1, if it is valued at $29,000 or more, you will be paying $2000 in taxes.
Sense Common
March 12th, 2009
3:09 pm
BTW – the 8% sales tax in Atlanta does not apply to vehicle purchases. the 7% Fulton county rate applies. Current law caps the rate at 7% for large purchases.
Paul A
March 12th, 2009
3:09 pm
so my 2002 F-150 is a piece of junk.
The air conditioning is broken, the brakes are trashed, the windows won’t go down and the windshield wipers don’t work unless I step on the brake pedal.
The body looks great though … I figure my truck is maybe worth $1000 today, as-is.
Under this law the buyer would have to pay tax on the “fair market value”?
What if the vehicle is a POS like mine?
7% of whatever some a$$hole beaurocrat thinks it’s supposed to be worth?
On my way home tonight I should stop at Home Depot and get a pitchfork, torches and some gasoline cans. My next stop after that ought to be at Wal-Mart for ammuntion and a sniper scope!
Beware GA legislature…. You are on very thin ice!
Ima Nidiot
March 12th, 2009
3:10 pm
Since the 7% is based on the State’s value, not the selling price, the ’sell to wife for $1′ does not work. However, it still makes sense to sell your car to your wife. Here is the math:
My car has an assessed value of 8570, which would cost $599.90 fee to sell to my wife.
The current ad-valorem millage rate is 33.78 where I live, which means $289.49 AV tax this year.
Assuming I keep my car for five more years, and the rate of depreciation is around 5% per year. Over five years my total AV tax would be $1,300. The actual depreciation rate used by GA is closer to 3% per year, which would be closer to $1,400 for five years of AV tax.
If I kept my car for ten years, the total AV would be closer to $2,500, so paying a $600 transfer fee today will save almost $1900 down the road.
http://motor.etax.dor.ga.gov/forms/motor.aspx
Fulton Resident
March 12th, 2009
3:11 pm
Does anyone know the answer to this question. Is the legislature proposing to do away with both the state sales tax, which I believe is 4%, as well as any local option sales tax that is levied by individual counties? Can they do that? Or will those of us that live in counties that have a local option tax end up paying the 7% tax (capped at $2000) plus an additional 1,2 or 3% tax on the entire cost of the vehicle?
If the local option is also removed and the tax is 7%, I think this tax will have a negative impact on new car sales this year. Just want we need during a recession — a disincentive for buying a car! If the local option remains then this is one of the most deceptive pieces of legislation I have seen in a while.
Garrie Butts
March 12th, 2009
3:12 pm
What about boat trailers, motorcycles,campers and motorhomes. Does the same apply or did they even think about that. What about the people who trade cars every year? Talking about killing the auto industry, now people will drive their cars longer and not trade as often.
What were they smoking?
easy voter
March 12th, 2009
3:12 pm
Well election day will be easy this year….every incument will NOT get my vote. I’m glad I can work on my own cars since I’ll have to keep them alot longer.
David
March 12th, 2009
3:13 pm
At the dealer, you can FINANCE the sales tax into your car loan. But with this, that option would be removed and you’d have to pay a lump sum for the title fee at the DMV. On a standard $20,000 car, that’s $1,400 that you now cannot add into you financing and have to pay upfront at the tag office.
Independent thinker
March 12th, 2009
3:13 pm
This goes beyond stupid. Apparently, these legislators didn’t think beyond the ends of their noses. How much do you think it will cost GA to administer this program? Don’t you also think people will forge bills of sale and there WILL be deals “under the table.”
I normally buy used cars from individuals, as I find them more trustworthy and reliable than dealers. I didn’t realize I was dealing under the table! Where do I go to turn myself in? Same place legislators who don’t pay taxes go?
Jai
March 12th, 2009
3:14 pm
and now I see why alot of people keep their out of state tags. This system is jacked up.
David Gatch
March 12th, 2009
3:14 pm
Screw them all, just keep your car till its 20 years old and all you have to pay is a tag fee, not taxes anyway……..Heck if Cubans can keep their old cars running under Fidel, from the 40s and 50s running all this time why can’t you?
Sense Common
March 12th, 2009
3:15 pm
Paul A, keep your truck and you won’t pay anything (except the ad valorem tax you currently pay). Sell it and the buyer will pay the 7% fee. BTW – if your brakes are trash, you shouldn’t be driving it.
Another point on ad valorem. Currently if you disagree with your vehicle’s value (like Paul A), you can appeal to the Board of Assessors in your county and have the value adjusted to actual market value. Not so in this Bill since the value is not used to collect local taxes, the Tax Assessor’s Office cannot touch the value.
Lauri
March 12th, 2009
3:16 pm
The unintelligent quotes in the article aside; if I understand this correctly – the money raised will go toward a new state trauma center. Will you then vote to cut medical professional jobs and emergecy medical technicans? Do us “regualr folks” a favor and focus on important issues for the state of Georgia, such as improving our education system, or better yet – get the money from the government officials who DON’T pay their taxes.
kARL
March 12th, 2009
3:18 pm
Bobo!!! The Check!!!
Caren
March 12th, 2009
3:19 pm
You can finance the sales tax when you buy a new car now. So, just think of all the money the cities and counties will make on traffic citations for folks driving with no tag/registration, because I don’t know too many people in this economy that can afford to buy a new car and then come out of pocket another $2,000 for a tag. Way to go Georgia!!!
Steve
March 12th, 2009
3:20 pm
I love the part about if you are buying $150k Mercedes you are only going to pay $2k max in sales tax. Thanks for looking out for yourself (aka the rich) and screwing over the normal guy again!
Marie
March 12th, 2009
3:20 pm
Wake up GA Legislators and get a clue. When a person buys a car from a dealer and then sells it to a person “under the table” the tax has already been paid. What you want to do now is double tax that item. And if that’s good for cars why stop there. Make us pay a tax for any item that is sold individual-to-individual; that could include anything from used clothing to furniture to that used lawn mower sitting in the garage. Lets get a tax police that monitors every garage sale that is held across the state of GA and nab those “under the table” deals that us dirty low-down tax cheats are engaging in, arrest ‘em, and spit the pits of GA peaches at ‘em.
Before you start talking about “under the table” cheats ya might wanna git yo own houz in order and git rid of the tax cheats sittin at the table breakin legislative bread. What we citizens are hearin over the gossip fence y’all got a lot cheatin goin on under dat there gold dome.
common sense?
March 12th, 2009
3:20 pm
Typical Republicans, acting without thinking something through. Even a few Dems jumped on board as well. Why is our state government run by idiots?
This firestorm is just getting started. This bill will be dead within days.
Mike
March 12th, 2009
3:21 pm
For the generally upset out there lets clarify:
If you keep the car you have now, nothing changes.
If you buy a new or relatively new car from a dealer and keep it 4+ years you will come out ahead (based on metro Atlanta millage rates).
If you buy an older used car from an individual, depending on the county your “title fee” will be offset in as little as 3 years of no longer paying ad valorum.
I can re-post specific examples if you like but this is a reasonable deal due to the offset of the ad valorum, unlike the one a number of years ago where we had to pay sales tax on private sales.
There are 2 very valid points above though… It will be hard to finance the sales tax on a new car now if you use dealer financing (bank financing you can likely still do this), and the tax deduction of the ad valorum tax may not transfer unless we can get this “title fee” classified as something other than sales tax
crackbaby
March 12th, 2009
3:21 pm
This legislation is being pushed by car dealers and their lobbyists. Gov. Perdue should veto this bill. Car sales from one individual to another should never be taxed. Zell Miller stood up for Georgians when the state tried to collect sales tax on car sales by individuals. Your turn Sonny!!!
chase
March 12th, 2009
3:22 pm
@Yankee – My advice would be to avoid Alabama and Columbus.