Lower Auto Excise Taxes Change The Deal on New Cars

Read the full report | Sales of new automobiles are a chief component of the American economy. New car sales are reported monthly and are a key measure of the nation’s economic health. This is why the federal government is investing tens of billions of tax dollars in long-term automotive research and development, and spending more tens of billions of dollars to ensure the shorter-term survival of America’s automakers.

The automobile business is important to Maine’s economy as well. According to the Maine Automobile Dealers Association, approximately 6,000 people are employed at 134 licensed new car dealers across Maine. A review of typical transaction costs and discussions with several Maine automobile dealers make it clear that a major obstacle to new vehicle purchases is Maine’s high automobile Excise Tax, which is heavily weighted to new vehicles. This tax, which is assessed at the beginning of a major purchase, is a significant impediment because in the typical purchases of Maine’s most popular vehicles, the tax bill is equal to nearly two typical monthly vehicle payments. If you’re selling cars… this is often the “deal killer.”

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