Articles

March 2, 2010

Sales tax could be a factor to consider in vehicle sales

The Cash for Clunkers program may be long gone, but auto dealers in at least one state could end up getting a hand from legislators if proposals to reduce the sales tax and similar levies begin to catch on.

Governor Ed Rendell of Pennsylvania has suggested that a lower state sales tax could boost auto sales, while in turn helping to balance the budget.

According to an announcement from Rendell's office, his plan would lower the state sales tax from 8 to 5.3 percent in Philadelphia, while much of the rest of the state would see the rate fall from 6 to 4 percent.

For consumers who would spend thousands of dollars on a car during tough economic times, the ensuing savings could be substantial. However, the many state deficits confronting lawmakers across the country suggest that it may be an uphill climb to convince many of them to start cutting their sales taxes.

Fortunately, auto dealers also have the option of reminding their potential customers that the Internal Revenue Service allows deductions on state taxes paid for new vehicles that cost less than $49,500.
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