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Car sales tax could move from dealer's city to buyer's

Published February 3, 2015 3:24 pm
This is an archived article that was published on sltrib.com in 2015, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Some cities worry that it would be highway robbery.

Rep. Ken Ivory has introduced legislation that would send the city portion of hefty sales-tax revenue from car sales to the buyer's hometown. Currently, that revenue stream goes to the city where the auto dealership is located.

Ivory, a Republican, represents West Jordan — a city that has 110,000 residents but no car dealerships.



"We're buying some cars and educating some other people's kids," Ivory said of the current sales-tax distribution scheme.

He would like West Jordan residents to keep that money in their city and has introduced HB181 to accomplish that.

Ken Bullock, executive director of the Utah League of Cities and Towns, said Ivory "is taking on a more complex issue than he may realize," and his bill "would upset a very delicate balance that has been worked out through the years."

Cities with many car dealerships — such as Sandy and Murray — get a lot of sales tax from big-ticket car sales there, but they also have added expenses, he said. They must provide extra police, street maintenance and other services to handle the dealerships, so it may not be fair to take tax revenues from them.

"There's a difference between their daytime and nighttime populations," he said, adding they need a way to fund the larger daytime population created by shoppers and workers.

But Ivory said he wants to create a discussion about whether the existing tax system is fair to bedroom communities like West Jordan.

He said current law does not allow auto dealers within a certain number of miles of each other, unless dealers agree to it. Dealerships are "a substantial economic engine" that "bring Costcos, and bring theaters, and bring restaurants and all the rest," Ivory said.

He said he would like to see changes either to more easily allow dealerships in his city, or move their sales tax revenue to the city where a buyer resides.

 

 

 

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