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New law will 'double tax' auto leases

ALBANY, Ga. — The state's new "birthday tax" law could have a chilling effect on the number of people who get car leases because of a little known part of the law dealing specifically with those types of transactions.

Beginning March 1, the decade's old tax law that requires vehicle owners to pay a yearly ad valorem taxes is changing to one that requires a one-time 6.5 percent title fee that would be charged at the time of purchase.

Car dealers have applauded the legislation because it includes a new requirement that casual car sales of used vehicles between two people also be charged the title fee, righting a disadvantage that they believe has gone on too long.

But one portion of the law that appears to have been missed by some will impact those consumers who choose to lease vehicles rather than buy.

According to Dougherty County Tax Director Denver Hooten, the current Georgia law requires leasees to pay a monthly fee based on a percentage of the base lease amount as a sales tax to the state and local governments. In Dougherty County, that is 7 percent.

Under the new law that starts March 1, not only will that tax continue, but people who lease vehicles will also have to pay the 6.5 percent title fee that people who are buying vehicles must pay — a move that some believe will discourage people from leasing vehicles and could have a negative impact on the car industry.

"Oh it'll kill it," Hooten says. "I know I would think twice about leasing a vehicle for two years when I have to pay 6.5 percent up front plus the monthly sales tax."

According to the U.S. Department of Transportation's Bureau of Transportation Statistics, in 2010, the latest year listed, there were 51.43 million auto sales and leases in the United States, with the majority being used car sales.

Of the 14.55 million new vehicle sales and leases that year, 2.97 million, or 20.4 percent, were leases.

Hooten said a new piece of legislation has been introduced in Atlanta that will likely reshape the "birthday tax" bill, shifting the amount of up-front tax consumers will have to pay.

"We've heard that it could go as low as 4 percent," Hooten said. "But, as far as I've seen, the issues facing people who lease cars are still going to be there."

Comments

rightasrain 1 year, 6 months ago

This Georgia Citizen is all out of KY. Just go ahead and rape me for all the money I have. Did Georgia Citizens know the state legislative bums were discussing this new tax on privately sold automobiles? What's next, a "Flea Market Tax Collector" who collects tax at Flea Markets? No...wait...maybe that person walking up the drive at the PRIVATE yard sale has come to collect taxes! I'll damn well guarantee that if my state rep voted for this, my vote is going to the opponent. While we're preoccupied with Obama's takeover of the country; our own local and state officials are ramming it up ours! If you are opposed to this tax on privately sold USED vehicles, contact your state representative and demand this tax law be reversed.

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FryarTuk 1 year, 6 months ago

Gloria Gaines is correct, the new law is nothing but a shell game which in the end will cause the taxpayers more money. The GOP is a bunch of bald faced liars. They would rathe climb a tree to tell a lie when they could stand flat footed on the ground and tell the truth. This law was touted as a taxpayer promotion. It isn't and it is the state republican ripoff artists who are responsible. Neither of the political parties serve the citizens and most especially the taxpayers.

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Thurman 1 year, 6 months ago

What a welcome for people moving into Georgia. "Welcome to Georgia Ya'll" and by the way--here is a bill for 6.5% tax on the vehicle you are bringing into Georgia although you just paid your ad valorem taxes in the state you just left. Another thought: There will be a 6.5% tax levied on cars sold between private individuals based on "the value of the vehicle". Now, who sets the value? IF I buy a car from my neighbor for $500 but the Blue Book value is $1000, then which figure is used for the 6.5% tax?

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waltspecht 1 year, 5 months ago

As it was last time they taxed private sales, the Blue Book Value to keep us honest citizens from fudging the bill of sale to lower the tax.

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oldster 1 year, 6 months ago

This tax is, and always has been one of the stupidest, punitive taxes I have ever seen.

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USTPC 1 year, 6 months ago

The new tax law provides the following:

1) Motivation to keep your current vehicle for as long as you possible can

2) Motivation to not move to Georgia

This just confirms my belief that once you get elected to office, regardless of what party you belong to, common sense and logic disappear.

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LikeItIs 1 year, 6 months ago

So if I move back to GA with my out of state purchased vehicles I pay 6.5%. Do I get a (partial) rebate when I leave the state in a couple years? No? Up yours Georgia...

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FryarTuk 1 year, 6 months ago

Ed Rynders telephone should ring off the hook. To the ruling politicos, I tell you like Sapphire told the Kingfish, " You is lying, no count and spineless as a jellyfish. And them is yore good points."

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chinaberry25 1 year, 6 months ago

As far as I am concerned, we just need to eliminate the politicians from outside Atlanta Metro. None have done anything for their areas. The just follow the Atlanta politicians. Not one significant company has come to SW Georgia area outside of Moultrie or Tifton or Cordele. Even rich Lee County gets a Chick Fil Le and the politicians rejoice. Stupid politics. Who is the stupid one, us or them. And not one person even bothers to run against them. I always vote for the new guy no matter what because I can see no change. Sanford Bishop is all for Columbus, but we go ahead and re elect him. I beseech each of you to go to Columbus and see how it is hopping. New businesses all over.

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edrynders 1 year, 6 months ago

This is Ed. My cell is 229 894 8386. Please call. FryarTuk I invite you to be first.

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trudy2 1 year, 6 months ago

No need for your cell # Ed. You should be a MAN and get a real job.

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FryarTuk 1 year, 6 months ago

Sorry, I didn't see this until just a few minutes ago. Called the number and after a number of rings there was no answer and so I hung up. Well, anyway, if you are the real Ed stand up and answer these 2 simple questions: Did you undersand the legislation? What did you do to prevent the ad valorem tax bill from passing the State House of Representatives in its present form?

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Engineer 1 year, 5 months ago

http://www.legis.ga.gov/Legislation/en-US/vote.aspx?VoteID=9058

According to Georgia General Assembly website, Mr. Rynders voted "Yea" for it.

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Jacob 1 year, 5 months ago

"According to Georgia General Assembly website, Mr. Rynders voted "Yea" for it."

Thank you. I will know who not to vote for, and I will contribute to his next opponent. Thanks for taxing me more, Ed.

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trudy2 1 year, 6 months ago

When you see folks driving around in junks cars because they can no longer afford to "rent" a car you can thank those you voted for.

I quit voting years ago, as FryarTuk stated "rip off artists", I refuse to waste my time voting for the likes of those folks.

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Sister_Ruby 1 year, 6 months ago

Well as much as I hate the idea of taxing private sales, Georgia is one of the few states that has not had that in effect for several years.

And as far as taxing everything that moves and breathes.........well they have to find SOME way to get money to pay for all the freeloaders out there. With deference to Carlton Fletcher....see I've revealed my evil, racist self again.

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FryarTuk 1 year, 6 months ago

No they don't need more and new tax money. They need to stop spending like a bunch of drunk sailors on liberty.

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sad_for_albany 1 year, 5 months ago

As a retired drunk sailor, I am offended to be compaired to a politician.

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FryarTuk 1 year, 5 months ago

I humbly apologize and admit my error in using the example. BTW, tonight I shall raise a tankard in your honor. Will you allow this example, spending money like a bunch of British marines in a bordello?

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sad_for_albany 1 year, 5 months ago

Thank you sir for the hoist. I suspect most any service member in a bordello would spend all of their hard earned cash!!!! You know, among all of the BS that flies here, there are some pretty good ideas. Some of them just need to be articulated better.

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RedEric 1 year, 6 months ago

The US Department of Agriculture proudly announces the food stamp program enrollment is now at 46 million people. Meanwhile the US Department of the Interior maintains it's program " Please don't feed the animals". The official position is that the animals will grow dependent on handouts and won't learn to take care of themselves. YES!!! Weneed that tax money to keep one stupid program after another running.

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ZCorp 1 year, 6 months ago

Well tough.People should buy their cars. Georgia still a bargain, compared to other States.

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FryarTuk 1 year, 5 months ago

People have to rent cars to go to work and take care of their families. Do you work at a buy here pay here or do you like the unemployment level? Why don't you take a closer look at the tax structures of the 5 surrounding states a bit closer. You might want to modify your comment.

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Cartman 1 year, 6 months ago

New taxes suck. Although I would rather take it on sales than on property or income. At least its the same rate for everyone that way. I do think our state does a better job at managing money than many other states, and definitely better than the feds. We will still ocassionally get hit with a tax increase, even by responsible legislators. And they still suck when they hit.

I do think the effects on leases was an unanticipated consequence. Easy fix: Just eliminate the sales tax from the monthly payment. A tax is in there anyways because the ad valorum is factored into the payment plan.

I vehemently opposed TSPLOST and I am definitely not a fan of this tax on casual motor vehicle sales. I would rather they have de-funded something instead of creating a new tax. Because any new tax is only another arrow in the quiver of legislators to increase at a later time.

But I'm not seeing the reasons to beat up Ed Rynders over it.

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FryarTuk 1 year, 6 months ago

He's the closest to the ruling politicos that put this law on the books. You lay down with dogs you get treated for fleas too.

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USTPC 1 year, 6 months ago

The article does not really say: Does anyone know if on a car purchase (not a lease) from the dealer is the car buyer going to have to pay the 7% sales tax + the 6.5% title fee or will they no longer pay the 7% sales tax?

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FryarTuk 1 year, 6 months ago

I spoke with a lady in Atlanta that works with legislative affairs (writing legislation) and it was her opinion that not many lawmakers knew much about the bill's impact when it was introduced and passed. Most of them thought it would fake the taxpayers by reducing the annual ad valorem in favor of the tag fee and private sales tax. The best guess she had was that you will have to pay both but it was her opinion that the title fee was a one time hit. Supposedly this idea started out as a way to get revenue from folks moving in state but wound up slamming everybody. How could a politician refuse a new tax , err fee or whatever.

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LoneCycler 1 year, 6 months ago

If you think politicians would do away with the sales tax on cars you must live on another planet.

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USTPC 1 year, 6 months ago

I did not think they would, just wanted clarification.

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USTPC 1 year, 6 months ago

Thanks Fryar. The title fee may only be a one time hit but if you buy a vehicle for $20k and have to pay the 7% sales tax plus the 6.5% tag fee then you are looking at an additional $2700 for that vehicle that you either have to roll into your loan or have available in cash. This is really going to hurt those who can barely afford a car now. As much as I hated the Ad Valorum tax every year it is much easier to come up with a $100-$200 dollars than it is to come up with $600+.

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FryarTuk 1 year, 5 months ago

Of course, I agree. The issue we are trying to determine is how will it impact a business, say with 6 or 8 rented delivery vehicles and another 4 rented for outside sales. I got a call into the CPA's office but with tax season it will be a few days before I know. If it is true we have to pay then it will really put the screws to a lot of small businesses and outside sales folks who use or sell rented vehicles. It will be a budget stretcher if not a buster and will mean GA is not going to be a good place for small business. Whoever said GA is a lot better than most hasn't looked carefully at the surrounding states sales and income tax structures. The real kicker for me is that you know good and well that the state GOP, just like the Democrats, doesn't give a tinker's damn about the tax paying citizens and wage earners of this state. When the Governor takes a political hack like the defamed former state senator Chip Rogers and forces the Ga Public Broadcasting Corporation to create a $150,000 a year job plus benefits, you know the taxpayers are expected to grab our ankles. For politicians of both parties, it's all about them. We need a third party movement in this state. Most of the republicans are just re-washed democratic hacks who have learned to comb their hair, brush their teeth and wear a blue shirt for TV.

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J.D._Sumner 1 year, 5 months ago

According to Denver, you'll no longer have to pay the sales tax. You'll just pay the title fee. So in the end, one should come out ahead unless they lease.

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dickyboy 1 year, 5 months ago

Georgia is still a bargain compared to other southern states... the problem here is we have a lot of poor people in south Georgia... black and white... kudos to Ed Rynders for putting his cell to call...how many politicians would do that? Frayar you probably called when he was in session...

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FryarTuk 1 year, 5 months ago

We sure do have a lot of poor people in south Georgia. We are going to have a lot more if we do not address the confiscatory taxes in these communities and the state. We have a lot of small businesses that use and sell rental vehicles. A lot of people ride in rented vehicles. Why don't you take a closer look at the tax structures of the 5 surrounding states a bit closer. You might want to modify your comment. Oh, and while you are passing out kudos for posting a cell number, ask Ed how he intends to vote on the bed tax determination to being handed off to a group of volunteers in a state bureauracracy. Don't call it a tax though because he may not know what that is. It's a, er, ahh...fee?? no, it's a uhm, aaahh, hmmmm.... assessment?? It's a tax! Kudos, to the heroic leadership of the GA GOP!!!

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waltspecht 1 year, 5 months ago

Somehow we want all these services, but we seem to want them without paying for them. The money has to come from somewhere until we actually stand up and get new Political types that really have the peoples best interest at heart.

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TrixibelleBento 1 year, 5 months ago

Is this law going into effect on July 1st or is it already on the books? I want to buy a car via private sale but wanted to know if it's already too late or do I have until July to make it happen?

Back in Texas, our ad valorem was based on the weight of the car, rather than the value. I had a sedan and it was $35. Then I moved to GA and now I pay about $250 a year. Makes TX and FL look really attractive about now.

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waltspecht 1 year, 5 months ago

May I explain how it was sold to the Politicians? The tax is a one time tax. The people it will affect most, are those that trade cars every two years, in other words, the rich. So instead of slowly gaining funds via a yearly tax, they get a bonus every two years. The Advalorem tax for two years won't approach the new tax in funds from those rich folks who shouldn't even flinch at the additional expense. However, those of us not really wealthy will be paying it. Plus not many rich folks buy used cars. So, who was this really directed to?

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FryarTuk 1 year, 5 months ago

From your story, it sounds like the GA GOP just borrowed a strategy from Obama's playbook called "wealth redistribution."

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chinaberry25 1 year, 5 months ago

I will debate about it costing more to live in other southern states. It is cheap to live in SW Georgia, but twice as expensive to live in No GA and Atlanta. Ala, Tenn and SC you pay about 20 cents less in gasoline taxes. Florida you pay no income tax, Texas too. I resent all the Medicaid that we pay and everyone is broke. We are taxed to death in GA and now Deal wants to expand Medicaid. Heard it yesterday.

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henryslittleboy 1 year, 5 months ago

Just complaining here will get you nowhere. Write your senator and representative in Atlanta "today". You can get the name, address, and phone number by googling general assembly in Georgia.

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Jacob 1 year, 5 months ago

Let's see how much the car dealers applaud the new tax when their sales plummet. Greed, greed, greed.

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Oldguy 1 year, 5 months ago

Do I understand this correctly. If you buy a new car you pay our local and state tax of 7% then when you also pay this new tax of 6.5%. That comes to 13.5% tax on a new car. Is that correct? If that is the case it will be a very negative effect on new car sales and hurt dealers that are already having problems.

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FryarTuk 1 year, 5 months ago

J D above clarifies the sales tax on purchases: "According to Denver, you'll no longer have to pay the sales tax. You'll just pay the title fee. So in the end, one should come out ahead unless they lease. " Denver Hooten probably is as good authority on the tax as any we will get. That's pretty good news for about 75% of the dealers' sales.

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SWGAconservative 1 year, 5 months ago

I have to ask do all of you live in Lee County...because if not I have yet to see where you hammered Mr. Dukes or Mrs. Fullerton about this same bill. If it is so bad why not belittle all the politicians in our area. If you live in Dougherty County Rynders doesn't represent you anyway. I am assuming of course that you read the entire bill and knew before commenting the other items attached to this bill; such as cost saving measures for manufacturers located in Albany, among others?

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FryarTuk 1 year, 5 months ago

If you have read the entire piece of legislation you would be the first. I criticize Rynders because he is a part of the ruling tribe and as I understand one of their leaders. Well, go lead. Anybody that supported this law or didn't attempt to block it deserves to be be politically scalded, please join help. Dukes could not find his way out of a wet paper bag and I simply dismiss him.

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