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Lieutenant governor urges taxing used cars on sale price, not JD Power value
Summary
Lieutenant Governor John Rogers told the House Transportation Committee he wants Vermont to tax private used-car sales on the buyer’s actual purchase price, saying national valuation guides overstate values and disproportionately harm lower-income buyers.
Lieutenant Governor John Rogers told the House Transportation Committee on April 30 that Vermont should stop taxing private used-vehicle sales on out-of-state valuation guides and instead tax the actual sale price.
Rogers said the current practice, which relies on national guides such as the NADA/JD Power values, can force buyers to pay sales tax on an amount higher than they actually paid for the vehicle. "I bought a used Subaru that needed some work for $7,000 and the state wanted to charge me sales tax on $12,500 almost double," Rogers said.
The proposal Rogers described would reinstate an older Vermont approach under which the buyer and seller sign a statement certifying the transaction price and the state taxes that amount. Rogers said the change would help lower-income Vermonters who rely on older vehicles to get to work. "This affects poor people who are buying used cars and can't afford new cars," he said.
Why it matters: committee members and Rogers said the current valuation method can add hundreds of dollars to the cost of putting a used car on the road and that the nationwide guides do not always reflect local markets. Rogers told the committee that his focus is on reducing that financial burden while still guarding against fraud.
Rogers and other members acknowledged the risk of scams if the state accepts self-reported prices. Representative Wells said the valuation guides were introduced to stop people from underreporting sale prices to avoid tax. Rogers replied that the signed declaration would not eliminate fraud but that "most people will be honest about it." Representative Keith asked about fiscal impact and Rogers said he had discussed the idea with the commissioner but did not have a revenue estimate; he said he would accept some revenue loss if it relieved an outsized burden on low-income buyers.
Committee staff and members also discussed alternatives such as requiring a dealer appraisal, but Rogers and others said appraisals can be costly or unavailable and thus create a barrier. Rogers recounted a constituent who sought a dealer appraisal and was quoted a higher fee than the extra tax would have been, so the buyer chose to pay the tax rather than pursue the appraisal.
Rogers recommended reverting to the prior system immediately while giving the Department of Motor Vehicles time to redesign a longer-term appeals or valuation process. "I would say we revert to the old system like I'm suggesting and then give the commissioner time to look at it," Rogers said. Later in the hearing members pointed to section 43 of the bill, which calls for a study; Rogers called a study "better than nothing" but said he would prefer a statutory fix sooner.
Ending: The committee did not vote on the taxation proposal during the hearing. Members asked DMV and other staff to provide more information on fraud prevention, fiscal impact and how an affidavit-based system would interact with dealer appraisals and existing tax statutes.
