Sales tax based on estimated value
Just paid the taxes on my car, but here in Texas they have changed over to a a system of charging you tax on what the ERV or Estimated retail value of the car is. So I searched and searched for a good deal on a car and end up paying 86 dollars more in taxes because of it! The car didn't even run right (no starter) when I bought it. How can it be worth a retail price without a starter?
Just a rant, I will stop now. Out of curiosity though, have any of you run into this recently in your state? Is it just a Texas thing or is this happening everywhere? |
I guess it makes sense, since people are always attempting to scam taxes on cars buy just writing in a lower sales price, but still it does end up screwing others.
Don't think NJ does that yet. |
You have to stick it to the man. I am not paying any more money than I need to. Always stay one step away from the line...
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Ontario will do that if the receipt seems too low. Pretty subjective. They also contact some vendors to confirm what they sold the car for in case the receipt is for a lower value to save on paying the tax for registration purposes.
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Hmm, thought I just submitted a post. Must not have gone through.
After some research I have found that they will honor the appraisal of a dealership. So I have an email off to the local Saturn dealership to see if they can help me out and get my 87 dollars back. BTW, I do understand why they do it this way. But I think they need to do a few things to make it better, such as let the public know they can get their car appraised. Oh, and make their databases talk to each other. They have a database of flood damaged vehicles but the appraisal calculator does not consult it when figuring up the retail value... |
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No such tax in Louisiana, yet. Checked the state fuel tax rate for Texas and Louisiana and there both at 20cents a gallon. Thought Texas might be less and were using the vehicle tax to make up for it but nope. https://www.taxadmin.org/FTA/rate/motor_fl.html |
Yup, in Ontario, you're taxed on whichever is higher: book value or reported value (bill of sale). It's been like that for quite a while - maybe 10 years?
The occasional vehicle will not be in their database (older, or low volume ones), in which case tax is due only on the reported value. |
Mentalic, do you not have tax on the sale of used motor vehicles?
MetroMPG, I guess we are just heading that direction. I will be thankful that I have a way of lowering it to the sale price for the time being. |
Paying sales tax for a used vehicle struck me as really odd the first time I had to do it. In the Netherlands and as far as i know in most other European countries as well, the person that buys the car new pays sales tax to the government and that's it. Why pay salestax on the same itme over and over again that the sales tax has already been paid for?
And then it seems somewhat arbitrary as a system as well, or is it just because car sales can be checked, because if I buy an old couch from someone, should I pay the local state sales tax? :) |
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Yes, I have a problem with charging sales tax to consumers trading goods. Especially if it is a used good.
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You actually only pay it on the net if there is a tradein or swap for Ontario - I might add. If your vehicle gets written off like mine did in July then it helps offset the replacement cost by the taxes from the insurance, so its good that way.
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I know registration here is (was?) based on weight, is that what's changed, or just the sales tax part? Or, are you talking about paying sales tax on the stated sales value vs. an estimated retail value?
...California has done registration rates based on vehicle value for years. It's a (word for female dog) when they do it that way, lemme tell ya, but sales tax has always been based on how much you claim to have paid for the car. I can maybe understand why Texas would choose to do it according to book value (not that I necessarily agree with it). Since there's no state income tax here, yet the state budget isn't significantly smaller than many other places, the government has to supplement its income with other use taxes and other fees, such as the rather stiff telephone tax. Doing sales tax on vehicles according to book value rather than stated purchase price makes would thus close the loophole of stating whatever paid value you want to in order to save some tax (c'mon, we've all done it where we paid $2200 for that nice 3-year-old Lexus :D ) |
I just went through this too here in Texas.
I buy cars for very cheap as I find the ones with problems I can fix. I just bought 2 Mustangs (a 97 and a 96)for $900 total. These were used car lot back of the yard specials. Both reported blown head gaskets and possibly other engine related problems but I was willing to take the risk as I am a good mechanic. I got them both appraised and it came in about $1300 each. I was prepared for taxes on $2600 but they were rejected because the lowest catagory they had listed them at $3100 and $2850!! Was told the only other catagory was "unrepairable" and they would not transfer titles on unsafe cars. I had my copy of the law and asked for a supervisor..... I pressed for the $900 total first as I had all the car lot documents and the super accepted it. I suspect that about 98% of the people pay and don't complain. Bruce |
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