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Tax break if gas guzzler traded in?

May 12, 2008 12:00:00 AM PDT
Poor Paul Cantarutti. With gas prices the way they are, he laments the mileage he's getting with his older SUV."Like 15 miles per gallon, maybe. Since it's older, it's getting less now," said Paul.

To help Californians like Paul, one state lawmaker wants to lower the sales tax for new vehicles. You trade in your old car. Then you subtract the trade-in value from the price of the new car. You only pay sales tax on the difference. The average savings is $600.

"It would take older, more polluting cars off the road. In exchange, people would be buying newer cars that are more fuel-efficient and have less emissions," said state Senator Dennis Hollingsworth, R-Temecula.

With new car sales nationwide forecasted to drop four percent this year, Sen. Hollingsworth thinks it'll also help stimulate the economy.

The state Board of Equalization estimates California would lose out on $400 million in sales tax, though a spur of new sales could lower that.

But Democrats, who are usually environmentally friendly, say we can't afford such tax breaks during these tough budget times.

"I think it's something that we should look at when the sun is shining fiscally. But that's not this year," said Assemblyman John Laird, D-Santa Cruz.

And some tax groups are wondering if this would open the door up for other items.

"Yeah, I'll trade in my guitar for that guitar and I won't pay the sales tax on it. Really. Any number of items. It really makes the law complex," said Lenny Goldberg from the California Tax Reform Association.

If the proposal passed, Paul would trade in his SUV for a hybrid in a heartbeat.

"You're talking about 40-to-50 miles a gallon. So they get gas maybe once a week," said Paul.

The bill will heard Wednesday. Thirty-three other states have a similar tax break in place.

 

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