State house approves changes to vehicle taxes

ATLANTA - The annual "birthday" tax on vehicles and the sales tax on vehicle sales would be replaced by a 7 percent fee on car titles under legislation that passed the Georgia House of Representatives Thursday.

House Bill 480 passed 133-39. It caps the one-time 7 percent tax at $2,000.

Warner Robins state Rep. Larry O'Neal, gave a fiery speech in the House well in support of the change.

"When we take the ad valorem tax off of our automobiles ... I can actually own my own car, without the government having the first lien on it," said O'Neal, a Republican who chairs the tax-code-writing House Ways and Means Committee.

"That's the first time that's happened in my life time," he said.

The measure would more than replace revenues lost from property and sales taxes, and local governments would split revenues from the new tax with the state. There would plenty left over to help the state fund trauma network improvements, though the legislature would have to appropriate that money and it wouldn't be guaranteed for the issue.

Opponents called the bill a tax increase that would hit ordinary Georgians who currently don't pay sales taxes on "casual" car sales between family and friends.

"It does away with the sales tax," House Minority Leader and Dublin state Rep. DuBose Porter said. "It does away with the ad valorem tax. It just creates a brand new tax.

"Y'all this is a tax increase," Porter said.

"How much more money is this going to generate? A whole lot."

The change would bring in an extra $450 million in fiscal 2010 for the state and local governments, which would split the proceeds, according to an analysis from state officials. The revenue increases would be less in future years.

But supporters said that most Georgians won't see a tax increase at all - particularly if they keep their cars longer. That's because the 7 percent fee is paid only once, when a car is titled, and not annually around your birthday, like property taxes.

People playing by the rules "are going to benefit and pay less money," House Majority Leader Jerry Keen said.

"It's a tax increase for those people who were doing their transactions under the table," said Keen, R-St. Simons.