Dear Editor,
I am renewing my interest in the outdated Automobile Sales Tax Law in the State of Kansas. The current law only allows a sales tax credit when a vehicle is traded into a registered car dealer. The general public is losing money and the car dealers are getting richer. When a person wants to sell their vehicle to the general public, the seller loses the sales tax and will pay 100% of the sales tax on the replacement vehicle.
It has been my experience that anytime you trade a vehicle into a car dealer you get below wholesale (auction prices) and typically lose between 20%-60% of the value of the vehicle for what you could sell the vehicle outright for. The dealer tells you to trade the vehicle in and get a sales tax credit. An example of this was when my neighbor was offered $2,500 for his van from a dealer but decided to sell
it outright and got $6,000.
The State of Missouri is an example of what an Automobile Sales Tax Law should do. In Missouri it doesn’t matter if you trade your vehicle in or sell it outright because the seller gets a sales tax credit and has 180 days to sell their existing vehicle to get the tax credit. A consumer that buys a new truck for $40,000 would have a sales tax credit on his new truck and have 180 days to get his existing vehicle sold to claim the tax credit. The consumer now is going to be offered a fair trade because the owner can sell their existing car outright.
Kansas has the 12th highest sales tax in the nation, we tax 100% of all manufacture’s rebates on cars and we allow car dealers to charge a reasonable uncapped documentation/administrative fee. The administrative paperwork fee is inconsistent between dealers and should be capped. States that border Kansas cap administrative fees and don’t tax rebates.
Kansas Legislators have passed some pretty interesting laws that most people would question “Why”? In 1993 a portion of the Kansas Title fees (automobiles) collected goes to the Kansas Highway Patrol vehicle replacement fund. This means that Highway Troopers now drive their vehicles only to 50,000 miles before replacement. Also in that same era, a law was passed for Recreational Vehicles (Motorhomes, Travel Trailers) are taxed by weight and not by value. A $100,000 motorhome averages less than $200 a year and a single parent with a five year old automobile would pay more property taxes than the motorhome owner. Legislators also have lost revenue by changing property taxes on boats. It has gone from 30% to 10.5% and now 5% in 2015 and used boats are not even charged sales tax.
The Legislators of Kansas needs to rethink their policies on automobiles. Laws should be fair for both the consumer and the car dealers. Consumers should be able to have options when they buy and sell their vehicles.
Kenneth Fangohr
Lawrence