Politics & Government

House wants 7 percent title fee to replace annual auto tax

ATLANTA — The annual “birthday” tax on automobiles 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 on Crossover Day.

House Bill 480 passed 133-39 on Thursday, and the measure now moves to the Senate for consideration. If approved and signed by the governor, it would take effect for cars purchased starting January 2010 and cap the 7 percent tax at $2,000. That fee would be due whenever an automobile changes title, regardless of how many times the title is transferred.

Cars bought before 2010 would still be subject to annual ad valorem taxes charged by local governments each year, until the cars are re-titled.

Crossover Day is the day when legislation has to have passed wither the House or Senae to be considered this year.

State Rep. Larry O’Neal, R-Warner Robins, gave a fiery speech in support of the change, which he called one of the best tax proposals he’s seen in his nearly eight years in the House.

“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, chairman of the House’s tax-code-writing Ways and Means Committee.

The measure would more than replace revenues lost from annual car taxes and sales taxes. Local governments would split proceeds from the new tax with the state, with the state getting the largest portion. There would be plenty of new revenue left over to fund improvements to the state’s trauma network, though the Legislature would have to appropriate that money annually 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.

“Y’all, this is a tax increase,” said House Minority Leader DuBose Porter, D-Dublin. “How much more money is this going to generate? A whole lot.”

The change would bring in an extra $496 million in fiscal 2010 for the state and local governments, though that number is expected to fall significantly in future years as fewer people pay annual ad valorem taxes and move to the title fee.

That estimate, based on numerous assumptions made by state fiscal analysts, was up from a Wednesday analysis that predicted $450 million in new revenue next year.

Supporters said most Georgians won’t see a tax increase at all — particularly if they keep their cars longer. 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 Island.

There’s no guarantee that the state’s portion of new revenues would be used to subsidize hospital emergency room operations and improve trauma care in rural areas, but that would be the intent, supporters said. As much as $150 million a year would be available, they have said.

If the Senate agrees to this change and Gov. Sonny Perdue signs it, separate measures to raise money for trauma upgrades — including a new $10 fee on car tags and Perdue’s “super-speeder” tack-on fines — may not be needed.

It’s not yet clear whether the Senate will agree to this change, but the annual “birthday” property tax on automobiles has been a popular target for state legislators, who have tried several times to do away with it.