Page 50 - GIADA-Oct 2017-Final

Study: Many Counties

Losers Since Georgia

Ended Car

“Birthday Tax”

By James Salzer, The Atlanta Journal-Constitution

Georgia’s population has grown and sales Dealers thought it unfair for them to have Clint Mueller, a lobbyist for the Association
have jumped since the General Assembly to charge sales taxes when Georgians could County Commissioners of Georgia, said
agreed to phase out annual property taxes buy from individuals and avoid paying the thing in GSU’s analysis that stands
on cars five years ago with the promise that them. out is that 99 counties — and with them
new taxes when vehicles are titled would hundreds of their cities and school districts
make up the difference. Vehicle owners also pay a title tax when — got less motor vehicle money in 2015
But a new analysis by Georgia State they move in from another state and than they did in 2012, when the change
University suggests vehicle tax revenue register their cars. was made. That meant about $75 million
declined in more than half of Georgia’s in lost revenue, the report said. The dip
counties in the years after the change. State Georgians who haven’t bought a car since occurred at a time when Georgians were
government, meanwhile, wound up with a the change continue to pay property taxes, buying more cars.
windfall, taking in about $1 billion in 2016. which have long been called the “birthday
tax” because they are due on the owner’s “When that (the sale of cars) goes down
One of the reasons: phasing out property birthday. No property taxes are paid again, it is going to have a big effect very
taxes had little effect on the state because on cars — new or used — once they are quickly,” Mueller said. “We’ve just gotten
almost all property taxes are collected by purchased and titled in the new system. lucky so far.”
local governments. The overall car tax take
for cities, counties and school districts was According to the analysis, the state That could blow a big hole in governmental
down about $170 million in 2016 from was starting to recover from the Great budgets.
2012, when the change was made. Recession when the change was made, and
the value of cars and trucks purchased The Georgia House this year passed a
The analysis by Laura Wheeler, a senior rose from about $24 billion in 2012 to $34 bill that would have lowered vehicle taxes
research associate at GSU’s Fiscal Research billion in 2016. on newcomers to the state — called the
Center, suggests roles will be reversed in “welcome to Georgia” tax — and set fixed
future years — local governments will Because those who bought cars no longer percentages for the split of title money by
make up some lost ground and the state had to pay property taxes, the amount of the state and local governments, but the
will take in less as the law adjusts the split vehicle property taxes collected by local measure stalled in the Senate.
of revenue. governments declined from $811 million
in 2012 to $280 million in 2016, the report The bill also would have charged used-car
Before the 2012 change, Georgians paid said. That figure is expected to continue to buyers the title tax on the sales price of the
annual property taxes on vehicles and sales fall as Georgians buy vehicles. car or truck sold by a dealer.
taxes on purchases if they bought from
dealers. Under the new system, car buyers The state and local governments split the New cars are currently taxed based on that
pay a title tax, whether they buy from title tax money, but it’s not a 50-50 split. The formula, whereas used cars are usually
a dealer or their next-door neighbor, a state has received a bigger share, but locals taxed at the typically lower book value.
change the politically powerful car dealers’ are being promised that will be reversed in The used-car lobby worked overtime to
lobby had been fighting to get approved for coming years, in large part to make up for kill that provision, and in the end, it was
decades. the loss of vehicle property tax money. successful. n

48 | GIADA Independent Auto Dealer OCTOBER 2017