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Riley’s tax package will place new burden on car dealers

Patrick Baugh seems to feel the same way every other businessman in Alabama thinks these days when it comes to increased taxes. He knows children need funding for education, but he questions whether state government is using the money it already has in the appropriate manner.

Among the 20 proposals Gov. Bob Riley has offered to state legislators is a hike on cigarette taxes, an increase in property tax and an elimination of federal tax deductions.

There’s another tax increase Riley has floated that could affect Baugh and his business even more.

One part of the tax hike will include an increase on the state sales tax on cars and other vehicles from 2 to 2.5 percent. In other words, Baugh &045;&045; who owns Baugh Chevrolet in Linden &045;&045; will have to tack on another half-percent in sales tax for every car he sells.

On top of that, the tax reform package includes an increase in the state tax on vehicle leases and rentals from 1.5 percent to 3 percent. And for maintenance to a car, the state will add a new 4 percent sales tax on any labor done to a car.

Around the state, some car owners believe the increased tax on car purchases and car maintenance will have a devastating effect on buyers in an already tough economy.

Brett McBrayer, who heads the Birmingham Auto Dealers Association, told The Birmingham News that an increase in car prices could keep some potential customers away from the car lot.

Baugh doesn’t see that as much of a problem, though.

The difference, to Baugh at least, is the amount of tax charged on the local level. That, he said, is where competitive pricing is affected more.

Though Baugh believes government should be held more accountable with the money it already has, Riley has stressed in his campaign to increase state revenue that he will clean up Montgomery and the amount of waste by legislators.

Along with his tax legislation, Riley has also submitted a number of accountability laws, which he feels will better direct the spending on the state level.

Riley also believes he has worked hard to clean some of the excessive spending already in Montgomery. Since taking office in January, Riley has cut close to $200 million in expenditures. Even still, he believes the state is short by nearly $600 million. His tax package &045;&045; currently being deliberated in a special session of the legislature &045;&045; would generate new revenue that is projected at more than $1.2 billion.

Two major portions of Riley’s tax package stall in a House committee on Tuesday, and legislators were scheduled to resume discussion of that legislation today. Both the House and Senate have until June 6 to complete the special session and present legislation concerning a tax increase. At that point, citizens in Alabama will have to vote on the legislation in a September special election.