Bill Would Require Car Buyers to Pay Tax at DMV

DMV lines could grow longer, like this one outside Springfield Mall, if car buyers are required to pay taxes directly to the state, instead of through dealers.
DMV lines could grow longer, like this one outside Springfield Mall, if car buyers are required to pay taxes directly to the state, instead of through dealers. (By Bill O'leary -- The Washington Post)   |   Buy Photo
By Anita Kumar
Washington Post Staff Writer
Friday, January 18, 2008

RICHMOND, Jan. 17 -- Northern Virginia residents could face long lines at the DMV after action by lawmakers Thursday that would force car buyers to pay auto sales taxes directly to the state instead of through dealers.

The House Transportation Committee passed a bill Thursday that would tweak last year's landmark transportation package by repealing the costly, unpopular abusive-driver fees and adding another step to the car-buying process for residents of Northern Virginia.

Instead of paying sales taxes through dealers, buyers would have to pay them at the DMV in person or possibly endure a lengthier process by mail or online. The proposal would make it impossible to finance the new 1 percent tax that is assessed on car sales in Northern Virginia and Hampton Roads.

Barbara Reese, deputy secretary of the Department of Transportation, said she has "serious concerns" about the proposal, which she said would be a burden to the DMV and car buyers.

"Consumers are going to be very unhappy," she said. "It will be an inconvenience."

The General Assembly approved a change last year that allows new regional transportation authorities in Northern Virginia and Hampton Roads to charge buyers a 1 percent initial registration fee based on the sale price of a vehicle.

Car dealers do not want to collect the additional regional tax because of the work it requires and because customers could confuse the tax as part of the car price. Dealers already collect a 3 percent sales tax for the state, which can be financed as part of a car sale.

Thursday's vote marks one of the first significant changes to the fragile transportation deal. Other groups that administer taxes, including developers, rental car companies and hoteliers, might try to follow the car dealers' lead by seeking changes in the bill.

Repeated calls to the Virginia Automobile Dealers Association were not returned Thursday.

The transportation package was supported by Republicans and Democrats as a way to avoid raising taxes to pay for millions of dollars in road and transit improvements.

Since the law went into effect July 1, Senate and House members from both parties have agreed that the driver fees need to be changed or repealed.

Gov. Timothy M. Kaine (D) called for a repeal last week, and more than 20 bills that would do so have been introduced in the legislative session.


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