LANSING – The Senate Finance Committee passed legislation Wednesday that would help spur vehicle and watercraft sales by reducing the cost of purchasing a new or used vehicle or boat in Michigan, said Sen. John Proos.
“I strongly support these reforms because they will help southwest Michigan dealers compete with out-of-state sellers,” said Proos, R-St. Joseph. “As a border community, this change is necessary to help boost sales and create jobs in southwest Michigan. It is a step toward bringing the state’s tax structure in line with nearly 40 other states, including all of our neighbors.”
Proos stated that Michigan law currently puts local, in-state businesses at a competitive disadvantage. When an individual today buys a new or used automobile or watercraft in Michigan, the state’s six percent sales tax is applied to the full sales price, even if the sale included a trade-in.
“This is a clear example of tax policy hindering Michigan job providers and consumers,” Proos said. “This smart tax reform could help our local economy and also result in savings for Michigan consumers of several hundred to thousands of dollars.”
Under Senate Bills 126 and 127, the sales or use tax would be applied only to the difference between the price of a new car or boat and the value of a trade-in.
The measures, known as the “sales tax on the difference” bills, have been praised by dealers who sell cars, trucks and watercraft. The legislation now heads to the full Senate for consideration.