Used Car News

Arizona dealer groups are urging state lawmakers to pass a law requiring private sellers to pay a state tax.

Bobbi Sparrow, president of the Arizona Automobile Dealers Association, said the state faces a $3 billion budget deficit.
“They’re going to have to do something,” Sparrow said, referring to a potential tax increase to address the deficit.
The issue involves fairness, Sparrow said.
Under Arizona law, retail businesses – such as car dealerships – are required to pay a transaction privilege tax. It is different from a common sales tax because it is a tax on the vendor for the “privilege of doing business in Arizona,” according to information from the state’s Department of Commerce.
Often, the cost of the 5.6 percent tax is passed on to the consumer, but it is not a direct tax on consumers.
The problem dealers have with the tax is that private car sellers don’t have to pay the tax, which gives them an advantage over retail sellers.
The Arizona ADA estimates that more than 250,000 vehicles were sold in private sales – a third of all used-vehicle sales in the state.
Sparrow estimates the state could raise nearly $100 million by taxing private sales in the same way it taxes dealer sales.
She said her group is working with the Arizona Independent Automobile Dealers Association.