Used Car Tax Break Good One

Sales tax relief on low-end used cars is the best tax break idea to come out of the legislative session so far.

It’s tough to get a job without a car. It’s tougher to keep one. From the employer’s point of view, it’s good for business when all of your workers and more of your customers can show up.

So imagine what it’s like: You can get a job if you can get transportation. You scrape every dime you can beg and borrow. You’re able to afford a decent car - and have to come up with enough new dimes to pay 6 percent sales tax.

Same goes for somebody starting up a new business - some business that needs a van.

I suppose there are some folks who buy cheap cars just because they’re cheap - to save on insurance costs for their teenager, for instance. The bigger number of us, however, tend to buy the best car we can get. Following those assumptions, there’s a lot of people buying cars in the $2,500 to $3,000 range because that’s the best they can do.

Senate Bill 274 by Sen.

Gilbert Baker, R-Conway, would double the sales tax exemption on used vehicles from $2,500 to $5,000. This will cost to the state of about $5 million in 2011-2012 and $7 million in 2012-2013.

Doing a little backwards math, those figures say that more than 20,000 used cars a year are sold in Arkansas that cost between $2,500 and $5,000. I don’t think anywhere near most of them are sold as spare cars that the rich folks use to drive around their hobby ranches.

This little bill, if it becomes law, will make a real difference in the lives of many.

Talk about lifting that limit went on for years.

Most of that talk came between legislators during boom times. This state ran record surpluses, yetcouldn’t see its way to reduce this blatant tax on the poor.

Now we’re still in recession. The state’s only holding it’s own financially - and a relief bill is sailing through.

I’ll take it whether I eventually understand the politics of why it’s sailing through this time or not.

It’s been a very, very long time since I’ve had to buy a marginal car. I hope and expect I’ll never have to do it again. Still, I can vividly remember that engine part bouncing along Arkansas 70, east of Hot Springs, all those years ago. I’d had my cheap car for quite a while, so it was no disaster.Still, I was driving a cheap car because I couldn’t do without any car at all.

If I could easily afford expensive repairs, I could have afforded a better car, too.

The 6 percent sales tax applies to any car purchased for more than $2,500 - and is strange.

If you buy a car for $2,500, you’ll owe no state sales tax on it. However, if you pay $2,501, you’ll owe the full 6 percent on the whole amount.

That $2,500 cap hasn’t been increased in at least 10 years. In fact, it was in the original law when used cars were first taxed this way and has never been raised.

The figure’s showing its age.

On top of all that, the whole idea of charging sales tax on an item - any item - that’s used is something that bothers me.

I suppose I should to address the capital gains tax cut proposal. The House passed that. The Senate Revenue and Tax Committee appears ready to let it languish and die.

That’s the kind of tax cut that helps spur economic growth, supporters say.

If you believe a $44 million tax cut will pay for itself through economic growth, here are three little words for you: Four dollar gas.

I hope the economy continues to pick itself off the floor, but I don’t think it’s in any danger of bumping it’s head on the ceiling yet, whatever business tax break we dream up.

DOUG THOMPSON IS THE EDITORIAL PAGE EDITOR.