Robertson tax relief bill signed into law

LANSING—Legislation to help spur vehicle and watercraft sales by reducing the cost of purchasing a new or used car, RV or boat in Michigan, is now law, said sponsor state Sen. Dave Robertson.

“This is a win for hardworking taxpayers across Michigan as well as the business community,” said Robertson, R-Grand Blanc Township. “Cars, boats are RVs are major purchases, and these reforms will help consumers save money when they buy a car or boat in Michigan and enable our local Michigan dealers to better compete with out-of-state sellers.”

When an individual today buys a new or used automobile or watercraft in Michigan, the state’s 6 percent sales tax is applied to the full sales price, even if the sale included a trade-in. 

“Michigan is currently one of only six states – and the only Great Lakes state – that taxes the value of trade-ins,” Robertson said. “This unfair policy puts in-state businesses at a serious competitive disadvantage and costs Michigan consumers more in extra taxes. It is a clear example of how bad tax laws can negatively impact both job providers and consumers.

“I would like to thank Governor Snyder for his leadership on this issue, there were times I thought this day might never come but now that it has the years of hard work were more than worth it. I can’t wait to watch the positive impact this will have on Michigan.”

Under Robertson’s measure, Public Act 160 of 2013, the sales tax would be applied only to the difference between the price of a new or used car, boat or recreational vehicle and the value of a trade-in.

Full trade-in value would be applied to boat sales. The trade-in value for cars and RVs would initially be limited to $2,000 and would increase by $500 in 2015 and each year after that.

An example of the reform’s impact, once fully implemented, is that if a car valued at $5,000 is traded in and the owner applies the trade-in value toward the purchase of a $25,000 car, the sales tax would only be applied to the $20,000 difference.