Higher tax on car sales proposed
Bump from 3% to 4% would still leave New Mexico’s rate lowest in the region
Bill would increase excise tax to 4 percent from 3 percent
Buying a new car could get a little costlier in New Mexico come July under a tax proposal working its way through the Legislature. The bill includes a provision to raise the excise tax consumers pay on new and used vehicles to 4 percent from 3 percent — though New Mexico’s vehicle sales tax rate would still remain the region’s lowest.
The tax increase is projected to generate an extra $49.3 million in fiscal year 2018 and more in subsequent years, according to a legislative analysis.
It’s among a series of state revenue boosters included in House Bill 202, which was approved Wednesday by the House and is now pending in the Senate.
Charles Henson of the New Mexico Automotive Dealers Association said his industry group does not support tax increases “of any kind,” and that “raising the price of a motor vehicle will adversely affect the number of vehicles sold.”
The legislative analysis did not forecast the effect on vehicle sales but did note that a tax increase might prompt some consumers to move up a vehicle purchase to beat a July 1 implementation.
Rick Nezzer, a spokesman for the Sibarro family of dealerships across southern New Mexico, said the company sells an average of 3,000-4,000 cars across its six locations annually, but he did not know exactly what impact a tax increase could have on sales.
“It’s hard to deal with hypotheticals, but in general, I don’t think anything good is going to happen out of it,” he said.
But even at 4 percent of the purchase price, New Mexico’s vehicle excise tax rate would stay the region’s lowest. Texans pay 6.25 percent in motor vehicle sales tax on their purchase. Arizona assesses a state and county tax that ranges from 6.1 to 7.6 percent, and various city taxes add another 1 to 4 percent, according to a spokesman for the Arizona Department of Revenue.
In Colorado, the tax varies by location. The state charges 2.9 percent, but municipalities can also collect sales and use taxes, according to a spokeswoman for the state’s tax department. In Denver, for example, the vehicle tax is 7.65 percent, according to that city’s website.
Other provisions in the House-approved tax package include increasing a state fee on commercial trucks, requiring online retailers to collect gross receipts tax from customers and eliminating certain tax breaks for the health-care industry.
The bill passed the House on a partyline vote, with Democrats in favor and Republicans opposed.