Who collects the Car Tax?

In Virginia, there is a new tax coming. On April 1, 2008 a new 1% sales tax (or 'Titling Fee') goes into effect on all car sales. (This fee is only applicable in certain areas of the state and the receipts are slated to go specifically to new highway construction.)

Typically, all of your taxes are included in the price of a car and the taxes are added into your monthly payments, so you really don't ever see them. As long as he can afford the monthly payment, the average buyer doesn't really care how that number was derived. It is all about what he can afford on a monthly basis.

What the problem is, is that the Virginia automobile dealers decided that adding an additional $300 or more to the cost of a vehicle is a burden that they did not want to bear, so legislators wrote the law such that the dealers do not have to collect the tax at the point of sale, therefore, it is not financed. BUT, it has to be paid. So, how is it going to be paid? By stroking a good old-fashioned check to the DMV at the time of purchase. How is this going to work? Many buyers can barely afford the monthly payment and all kinds of machinations are done to tweak the trade-in, incentives, deals, etc. to get to the point that the buyer can do the deal without any out of pocket expense. Where is the buyer going to get an extra $300 to pay for the fee?

Good question!

If you see a parallel between this and your paycheck deductions, then The-Asterisk is right there with you. You will, no doubt, also come to the realization that this is why the Fair Tax will probably never see the light of day. As soon as average Americans get to see their money literally flowing out of their pockets, they will likely become more incensed at discovering where all of that money is going.

The Payroll Deduction, begun during WWII, was the most important innovation in taxing technology since the debtor's prison. It allowed people to have their income drained without even really knowing it was happening. AND it shifted enforcement and responsibility from the individual to their employer. Same thing with health insurance. Same with gasoline taxes, excise taxes, and many other taxes that are collected by the retailer.

The-Asterisk will follow this development in Virginia, but my money (pun intended) says that the Governor will force the fee to be collected as part of the financing package. Remember, it is all about the monthly payment and not ever having to touch the money...

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