An article by John Lyon at the Arkansas News Bureau caught my attention yesterday. It was regarding the used car tax—more specifically, how a new law that raises the sales-tax emption on used cars just isn’t enough, according to a local car dealer. We agree. As a matter of fact, we think the used car tax should be completely eliminated.
Before I get to the reasons why the tax should be abolished, let’s go over some background on the issue. Lyon’s article points out: “Sales taxes used to apply only to new vehicles in Arkansas, but in 1991 then-Gov. Bill Clinton pushed through the Legislature a bill extending the tax to used cars.” The tax’s purpose was to provide more education funding.
However, since its passage, this tax has hit low and middle-income earners the hardest, as they are the ones most likely to purchase a used vehicle. This is the primary reason why the tax should’ve never been enacted in the first place, but also why we have worked with legislators to increase the sales-tax exemption. In 2009, we worked with then-Rep. Pam Adcock, and in 2011, we worked with Sen. Gilbert Baker. The Legislature—an increasingly more conservative body—chose to pass Sen. Baker’s bill, which exempted all used vehicles costing less than $4,000. This was a very welcome change, seeing as the exemption hadn’t been altered since 1997, which was only $2,500. The original 1991 tax exempted used vehicles costing less than $2,000.
We were proud to support Sen. Baker’s bill, and we’re very thankful that the Legislature chose to pass it. But we think the owner of The Car Connection in Little Rock, Tommy Gibson, said it best: “They’re way off on the $4,000. It should be at least double that, if it should be there at all.” Mr. Gibson couldn’t be more correct, and we’ll be working towards increasing the exemption, and would love nothing more than to see the entire used car tax eliminated one day.
Not only is the used car tax an unnecessary financial burden on the very people most likely to purchase used vehicles, it’s simply bad policy for our state government to tax cars more than once. It should be enough for new cars to be taxed when they’re driven off the lot. Repeatedly taxing the same vehicle as it changes hands throughout the years is wrong, and this policy should be changed. It is a necessity for most Arkansans to drive, whether that be to work, school, church, the grocery store, or many more places. This tax is making it more difficult for Arkansans to simply live.
I believe that it’s time for our state government to make it easier for folks to buy a higher quality used vehicle. Let’s work together to phase out and eventually abolish the used car tax.
