Montana’s Passing a “Ferrari Tax” on Tax-Evading “Montanans”
The DMV’s “out-of-towner” exotics sporting Montana plates at local Cars and Coffees may be better off paying taxes, titles, and tags here rather than America’s mountain state of Montana.
Covered by the Bozeman Daily Chronical, last week on April 12th, 2017 “the Senate Finance and Claims Committee unanimously voted to levy a new 1 percent surtax on new vehicles and RVs with manufacturers’ suggested retail prices of more than $150,000. The tax would drop to 0.9 percent when vehicles are 1 year old, to 0.8 percent if they are 2 years old.”
Currently, there’s nearly 1,000 exotics that fall within the tax parameters to bring Montana government nearly “$2.5 million in fiscal 2018, which begins July 1, and $3.1 in each following year.” Most of the vehicles are Lamborghinis, Porsche, and Mercedes. There are 42 RV’s that are also registered to the state with a value over $150,000 that qualify for the tax laws as well.
Why do people register exotics in Montana anyway? Montana is one of the few states that doesn’t tax its residents with general sales taxes. There are only 4 other states that don’t enforce the general sales tax (Alaska, Delaware, New Hampshire, Oregon are the others). To circumvent tax dodges, Montana requires that the tagged vehicles be stored in Montana for a “sales-tax test period,” which varies by state.
To put the tax in comparison, Virginia’s general sales tax as of 2017 is 5.3% – on a $150,000 vehicle, that would add up to nearly $8,000 in additional taxes paid to the big boys upstairs. Maryland general sales tax in 2017 is 6 percent – which would mean $9,000 in additional taxes on vehicles registered within the state.
But not all Montanans support the tax on luxury vehicles. In the same article, “attorney John Bennett of Missoula who has has helped a number of out-of-state clients who have purchased RVs and luxury cars from anywhere and registered them in Montana, [says] that if Montana passes the new tax, [he] predicted it would motivate these buyers to look instead to other states without sales taxes and luxury vehicle taxes.
“To sum up, currently Montana is the prettiest girl at the ball as far as out-of-staters who want to register their vehicles tax-free in a state,” Bennett said. “If Montana imposes a 1 percent tax on vehicles with a MSRP of $150,000 or more, that will no longer be the case. What Montana will have done is kill the golden goose.”
Recently, Fairfax County law enforcement has also been cracking down on tax-evading exotics vehicles asking neighbors to report locally stored cars with out-of-state tags. Residents of the county are asked to report tax evasion through this online form.