Vehicle owners in Georgia now pay two taxes on their autos: state and local sales taxes on vehicles purchased from dealerships, and the perennial ad-valorem tax on their vehicle that is paid to local governments on the owner’s birthday, often maligned as the “birthday tax.”
Under HB 386, all sales taxes and the ad-valorem tax would be eliminated and replaced with a new, 7 percent title tax to be levied when a vehicle changes ownership. Gov. Nathan Deal has indicated he will sign it into law.
Cobb Tax Commissioner Gail Downing said the new title tax will be paid to the tag agent in the county in which the vehicle is registered and will be due when the buyer applies for the title and registers the motor vehicle.
Downing also said that owners of vehicles titled before March 1, 2013, will continue to pay annual ad-valorem taxes until the vehicle is sold or transferred.
But owners of vehicles purchased between Jan. 1, 2012, and March 1, 2013, will have the choice to “opt in” to the new title tax system in 2013, she said.
She is uncertain about what the new processes will add to the workload in her office. If the bill is signed into law, her office intends to launch a major public relations campaign to inform residents of the changes.
“My No. 1 concern is customer service. We have built a good reputation and I don’t want people to be surprised with a big bill when they come in to title a new car,” Downing said.
The bill’s sponsors intended to establish motor-vehicle taxes on two types of transactions: “casual sales,” which are transactions between private citizens, and for automobiles purchased in other states by Georgia residents. People who move into Georgia and bring a vehicle would also pay the 7 percent title tax when they register their vehicles here, but would be allowed to split it into two payments.
Jim Pehrson, the county’s finance director, is not taking a wait-and-see approach to the potential impact on county budgets.
“We have done some detailed analysis and we are currently working with the state to get better information on the title statistics on a county-by-county basis. We are trying to refine our assumptions so we can better calculate the fiscal impact on a short- and long-term basis,” Pehrson said.
Jim Greenshaw, general manager at Marietta Toyota, said news of the likely tax change has gone unnoticed by shoppers at his dealership. Not a single customer has asked about it, he said, and he is unsure whether it will impact sales.
“We’ll have to wait and see,” Greenshaw said.