Local Politics

Dealers Try to Put Brakes on Car Tax Increase

Posted July 4, 2007 4:09 p.m. EDT
Updated July 4, 2007 7:37 p.m. EDT

— State lawmakers are scrambling to find ways to build roads, from toll roads to gas taxes. Now, car dealers statewide are fighting legislation that would increase the tax for all car and truck purchases.

Senate Bill 1201 would increase the tax on buying a new car or truck from 3 percent to 6.75 percent.

"That's something that's definitely going to be felt," said Tracey Vajay, who spent Independence Day looking at Chevy Tahoes with her husband, Jeff.

The tax bill on a new Tahoe would jump from around $1,000 to more than $2,300 if the bill becomes law.

The state Automobile Dealers Association launched a media campaign to kill the road revenue proposal. The "Stop The Car Tax" fliers and Web site are geared toward stirring consumer anger.

"I think it's sticking it to the consumer," said Richard Cholerton, sales manager at Bobby Murray Chevrolet in Raleigh. "Anytime you get into somebody's pocket, it hurts you, whether it hurts you as a consumer or us as a dealer."

The bill also would affect the trade value of a used car.

Consumers currently pay tax on the difference between their new car and trade-in. If someone were to buy a $25,000 car with a $5,000 trade, for example, that would create a $600 tax bill.

But under the proposed changes, the trade-in value wouldn't be factored, which would lead to a $1,687 tax bill for the same purchase and trade.

"Your payments are going up $20 to $40 a month. That's a big hit," Cholerton said.

The vehicle tax increase hasn't gotten much traction in the legislature. Sen. Dan Clodfelter, D-Mecklenburg, remains the only sponsor of the bill.

But some consumers said they might be able to swallow the higher monthly car payments in exchange for better roads.

"It's always frustrating, but if we know what it's going towards, then it would make it a little bit easier," Jeff Vajay said.