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Luxury car buyers get break
By MARK ALBRIGHT, Times Staff Writer
The last remnant of a luxury tax on high-end cars and SUVs expired New Year's Day, eliminating a surcharge that added $1,200 to the cost of a $40,000 vehicle. "Just as cash rebates and other incentives helped luxury car sales in 2002, repeal of the luxury tax should help boost sales in 2003," said Paul Taylor, chief economist for the National Association of Automobile Dealers in McLean, Va. The tax was part of a federal deficit reduction act aimed at big spenders that was signed by President George Bush in 1990. The tax added 10 percent to the cost of recreational boats priced at more than $100,000, furs that cost more than $5,000 and new cars that sold for more than $30,000. The tax was cited by many boat retailers as crippling their industry, along with a recession and the Persian Gulf War. Boat sales plummeted 50 percent to $10-billion in 1992. The fur and boating industries persuaded lawmakers to repeal the tax in 1993, but the auto industry had to settle for a 10-year phase-out. By 1998 the luxury tax on new cars was whittled down to 3 percent and the minimum price threshold raised to $40,000. Last year the tax cost 700,000 car buyers about $200-million. Some dealers said the tax savings is "relatively insignificant" in the decisionmaking process for high-end car buyers. So they are not saying much, if anything, about it in their advertising. Besides, they don't want to rile people who just bought new cars and paid the tax. "I doubt many people are going to drop their spoons at breakfast and run out to buy a car because of it," said Ron Salhany, president of Auto Nation's North Florida district, which owns 52 dealerships. "But it is going to make a difference. This was a punitive tax." "Any time the customer can save some taxes, it helps," said Scott Larguier, general manager of Dew Cadillac, where the average vehicle sells for about $47,000. -- Mark Albright can be reached at albright@sptimes.com or (727) 893-8252.
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From the Times Business report
From the AP
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