Senate panel passes Ferrari tax targeting luxury cars, RVs, Montana Legislature
Montana Legislature
Senate panel passes ‘Ferrari tax’ targeting luxury cars, RVs
HELENA — Buyers of fresh luxury cars and recreational vehicles registered in Montana would face a fresh annual tax of at least $1,500 if their vehicles are worth at least $150,000, under a bill endorsed by a Senate committee on Wednesday.
The Senate Finance and Claims Committee unanimously voted to levy a fresh one percent surtax on fresh vehicles and RVs with manufacturers’ suggested retail prices of more than $150,000. The tax would drop to 0.9 percent when vehicles are one year old, to 0.8 percent if they are two years old.
Dubbed by some legislators as the “Ferrari tax,” the fresh tax would be on top of the current annual licensing fees already paid by owners of these vehicles under the amendment.
The amendments are now on House Bill 650, sponsored by Rep. Randy Brodehl, R-Kalispell. The utter Senate will debate the bill.
Committee members didn’t debate this proposed fresh tax at all during their discussion of a larger amendment that included the tax.
An estimate displayed this tax would raise an estimated $Two.Five million in fiscal 2018, which commences July 1, and $Trio.1 in each following year, albeit an opponent later questioned those projections. The extra revenue would go for fresh highway construction projects. Every $1 in state highway funds can attract a $7 federal match.
A total of nine hundred eighty four luxury vehicles and forty two motor homes are now registered in Montana that would meet the age and value requirements and qualify for the tax, Justice Department spokesman Eric Sell said.
Motor Vehicle Division records display at least twenty fresh vehicles with suggested prices of at least $150,000 are registered in Montana. They are Bentleys, Lamborghinis, Mercedes-Benzes, McLarens, Porsches and Rolls Royces.
Attorney John Bennett of Missoula is opposing the bill and questioned whether those estimated tax numbers would materialize if the tax passes.
The lawyer said he has helped a number of out-of-state clients who have purchased RVs and luxury cars from anywhere and registered them in Montana, one of five states without general sales taxes. Then they store their cars in Montana or somewhere outside of their home states for a “sales-tax test period,” which varies by state. That way they can be “bulletproof” from their states’ sales taxes, he said.
“It can work very well for RVers who want to take a excursion out of their states,” Bennett said in an interview. “It can work very well for someone who buys a car that they don’t need to drive (for a period). It’s typically a collectible car.”
If Montana passes the fresh tax, Bennett predicted it would motivate these buyers to look instead to other states without sales taxes and luxury vehicle taxes.
“To sum up, presently Montana is the prettiest dame at the ball as far as out-of-staters who want to register their vehicles tax-free in a state,” Bennett said. “If Montana imposes a one percent tax on vehicles with a MSRP of $150,000 or more, that will no longer be the case. What Montana will have done is kill the golden goose.”