Bills Pass to End Trade-In Sales Tax

Sales tax on trade-in motor vehicles, recreational vehicles, and boats will no longer be charged at current rates after the House and Senate passed bills on Tuesday to discontinue the tax on a purchase of any of these vehicles.

House Bill 4234, sponsored by Representative Andrea LaFontaine (R-Richmond) was sent to Governor Rick Snyder after passing the Senate 38-0 then through the House 101-7. The Governor’s administration argued that with the end of the sales tax there would be a revenue loss to the state but eventually agreed to a phase-out, which would help to minimize and spread out the revenue impact.

Senate Bill 89, sponsored by Senator Dave Robertson (R-Grand Blanc), which provides for the phase out, was also sent to the Governor.

The agreed-upon phase out, which begins December 15^th upon the Governor’s signature, calls for a $2,000 sales tax exemption applied to the value of a vehicle used as part of the purchase of a new one. The exemption would grow by $500 each additional year until it reaches the $14,000 cap.

SB 89 also has a provision stating that if Medicaid expansion is repealed then there will be a stop to the sales tax phase-out, and the full exemption will be implemented.

The House and Senate passed similar bills in the 2011-12 term, but the legislation was not sent to Governor Snyder because of the administration’s revenue impact concerns. An analysis of these bills revealed there would be a $233 million reduction in state revenues when the sales tax was removed from the purchase of new motor vehicles, recreational vehicles and boats.

posted by PAA Online , Friday, October 25, 2013 11:18 AM
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