Sen. John Proos: Senate-approved bills help boost auto and boat salesPublished 8:56pm Wednesday, July 11, 2012
Currently, when someone buys a new or used automobile or watercraft in Michigan, the state’s 6 percent sales tax is applied to the full sale price, even if the sale included a trade-in.
Michigan is one of only six states — and the only Great Lakes state — that taxes the value of a vehicle being traded in during a purchase.
This puts our local, in-state businesses at a competitive disadvantage and costs Michigan consumers more in extra taxes.
I strongly supported reforms recently approved by the state Senate because they will help spur vehicle and boat sales by reducing the cost of purchasing a new or used vehicle or boat in Michigan.
It will help consumers save money and also help southwest Michigan auto and boat dealers compete with out-of-state sellers.
Under Senate Bills 126 and 127, the state sales tax would only be applied to the difference between the price of a new car or boat and the value of a trade-in.
The relief would phase in over six years, starting with a $2,500 exemption in 2012. The amount would increase by $2,500 each year until reaching $15,000 in 2017. After that, the trade-in value is uncapped.
For example, once fully implemented, if a 5-year-old car valued at $5,000 is traded in and the car’s owner applies the trade-in value toward the purchase of a $25,000 car, the sales tax would only be applied to the $20,000 difference.
Bob Myers of Pier 1000 Marina in Benton Harbor supports the measures, saying: “Michigan consumers are essentially being double-taxed when they purchase a new watercraft with a trade-in. This legislation would help the southwest Michigan boating industry compete with retailers from across the border, which is a major concern for a company like ours.”
As a border community, our region understands that leveling the playing field with competition in neighboring states will help boost sales and create jobs.
The current law is a clear illustration of how bad tax policy can negatively impact job providers and consumers.
Making this smart reform could help our local economy while also saving consumers millions of dollars.
Tags: Sen. John Proos