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.


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