Michigan House OKs bill giving sales tax break for vehicle, boat purchases … – Michigan Business Review

 

LANSING – A proposal moving through the Michigan Legislature would allow residents to pay a lower sales tax amount when they trade in vehicles or boats as part of a deal to buy new or used ones.

The Michigan House approved House Bill 4234 by a 100-7 vote on Thursday. That sends the bill to the Senate, which has passed a similar measure.

It remains to be seen if a final version of the plan will be adopted by the Legislature.

Similar bills were approved in the House and Senate last year but were never sent to Gov. Rick Snyder’s desk. That’s in part because of the Snyder administration’s concerns about the plan, and partly because differences between competing versions of the proposal were not resolved.

In general, the House-approved plan calls for charging sales tax only on the difference between the price of a new or used vehicle or watercraft and the agreed-upon value of a trade-in. That would lower the amount that would be subject to sales tax by the trade-in’s value, although that change would be phased in over several years for vehicles through the House plan.

The plan would save taxpayers some money, but it would cost the state revenue on vehicle sales – an estimated $125 million to $150 million a year once fully phased-in, according to an analysis from the House Fiscal Agency.

Supporters of the bills say Michigan auto dealers are losing business to neighboring states that have better sales tax arrangements for buyers.

“Michigan should mirror the policies of other states” so it is “not at a competitive disadvantage,” said the bill’s sponsor, Rep. Andrea LaFontaine, R-Columbus Township.

The bill would apply to sales of motor vehicles, recreational vehicles and watercraft.

Email Tim Martin at tmartin4@mlive.com. Follow him on Twitter: @TimMartinMI


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