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Archive for Thursday, August 26, 2004

Vehicle sales tax law in limbo

Department of Revenue asks lawmakers to review statute

August 26, 2004

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— Legislative leaders have asked a committee to review a new state law regulating vehicle sales, which is raising several complaints.

The law, which took effect July 1, changed the way automobile sales between individuals were calculated. The intent was to capture additional revenue for the state, but House Minority Leader Dennis McKinney said Tuesday that the law missed the mark.

"Fix it or repeal it," said McKinney, D-Greensburg. "And right now, I don't know if it can be fixed."

The law bases the sales tax on the higher of two prices -- the selling price or a value set by the state. Previously, buyers paid taxes on the sale price.

Critics say using the property tax value ignores important factors about the vehicle, including mileage and overall condition. McKinney said he had heard from constituents and county officials asking for changes to the law.

Legislators approved the change as part of a comprehensive tax bill adopted this year. An audit suggested the state would collect between $7 million and $13 million in taxes by changing policy.

"This bill had a provision that cut the franchise tax in half for thousands and thousands of small businesses," McKinney said. "On the balance, it was a good bill to pass. But every year, you accept some bad with the good in tax bills."

A joint tax committee will review the law beginning Sept. 16, at the request of the Department of Revenue. Recommendations to adjust the policy would be sent to legislators for consideration after the 2005 Legislature convenes in January.

Reps. Harold Lane, D-Topeka, and Nile Dillmore, D-Wichita, already are proposing legislation to repeal the law.

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