Opinion: Trucking Is Still Overtaxed
In the second reading, as a trucking company you realize that, as it relates to sales tax on the sale or purchase of motor vehicles, this is no benefit for common carriers that operate in interstate commerce because common carriers currently enjoy the benefit of a sales-tax exemption on the purchase of tractors and trailers.
Upon the final reading, you might not be surprised to learn that the revenue raiser within H.B. 386 comes at the expense of the trucking industry and those who title motor vehicles in Georgia. Effective January 2013, the “alternative state and local title ad valorem tax fees” will go into effect. This simply means that motor carriers will enjoy the benefit of the eliminated ad valorem on motor vehicles by paying an additional 7% to 9% title ad valorem tax fee upon the titling of the motor vehicle.
A motor carrier will need to keep a tractor a minimum of six years just to break even on the “alternative ad valorem fee,” not to mention the additional cash outlay on the front end of the purchase.
In addition, truck leasing companies will pass on the cost of the “title ad valorem tax fee” within the cost of a lease, but they also will pass on the Georgia use taxes imposed by H.B. 386 on the lease of motor vehicles to motor carriers.
In short, for a motor carrier leasing a motor vehicle in Georgia, taxes and fees potentially will increase by 16% — the 7% to 9% title ad valorem tax fee plus the loss of the 7% sales tax exemption for common carriers as imposed as a use tax on leasing companies.
In Virginia, a ruling of the Tax Commissioner [No. 12-90, June 5, 2012] stripped truck and trailer leasing companies of the resale tax exemption for the purchase of repair parts installed on the equipment in which the lessor is obligated under the lease agreement to make repairs.
Virginia repealed the sales tax exemption for common carriers of property by motor vehicle in 2007. However, the sales tax exemption remains in place both for common carriers of property by air and by railway. That means any motor common carrier leasing tractors or trailers that have repairs made in Virginia will pay sales taxes on those repairs.
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