State Senate Approves Tax Cut For New Cars

Today, February 6th, the state Senate approved the legislation according to which sale tax of new cars and boats will be collected in Michigan by exempting the allowance for trade-ins.

Sen. Dave Robertson says that the new legislation will increase sales of vehicle and watercraft in Michigan and will become a competitor for the states that already have this law. Although the new legislation was approved by the majority of senators, Sen. Roger Kahn argued that a new tax break is futile when the state budget is delicately balanced.

From the purchase price of a new or used vehicle or boat, the state takes 6% sales tax. The new legislation, which is now discussed by the state House, the tax would depend on the difference between the value of a trade-in and the purchase price of the vehicle. If a customer pays $1,800 in sales tax for a vehicle that costs $30,000, under the new legislation he would pay $1,500 tax on the same purchase.

Gov. Rick Snyder expressed his concerns regarding this legislation saying that it would cut tax revenue by $45 million during its first year in effect and by $277 million in the 2022-23 state budget year.