LANSING — Legislation that would boost industry while lessening the tax burden on Michigan residents was approved Wednesday by the Michigan Senate, said state Sen. Goeff Hansen, R-Hart.
“These measures will help making boating more affordable,” said Hansen, chair of the Senate Outdoor Recreation and Tourism Committee. “In addition to the Great Lakes, Michigan also has more than 11,000 inland lakes and the perfect way to enjoy these bodies of water is on a boat. Reducing the tax burden will encourage more people to become a boat owner and enjoy all the natural beauty our state has to offer.”
Senate Bill 126 would amend the Use Tax Act to exclude taxation on the trade-in values of used cars and boats when the trade-in value is being applied to a new or used car or boat.
SB 127 would amend the General Sales Act and create a six-year phase-in for the program. In 2012, only $2,500 would be exempt, and this amount would increase by $2,500 each year until 2017, when it would reach $15,000. After that, the trade-in value is uncapped.
For example, if a five-year-old car valued at $5,000 is traded in after the law is fully implemented, and the owner of the car applies the trade-in value to a new or used car valued at $25,000, the car being purchased would be taxed at $20,000 – the difference between the value of the new car and trade-in value of the old car.
Michigan is the only Great Lakes state and only one of six states nationwide that taxes trade-in values.
“I look forward to seeing these proposals signed into law,” Hansen said. “People shouldn’t be punished for buying a new car or wanting to own a boat, and that’s exactly what these bills will prevent, and just in time for boating season!”
SBs 126 and127 now advance to the House of Representatives for further consideration.