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June 2012
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Car dealers notice impact from July 1 sales tax change

BY DAVID ZOELLER dzoeller@paducahsun.com

While it's too early to know just how much a new Kentucky law will boost sales of new cars, local car dealers are optimistic the results will be significant.

A state law that became effective July 1 allows buyers of new cars to reduce the amount of sales tax they pay, typically by several hundred dollars. Buyers can subtract the value of their trade-in from the value of the new vehicle and pay the 6 percent sales tax on the difference.

Prior to July 1, consumers were required to pay the sales tax on the price of the new vehicle (actually 90 percent of the manufacturer's suggested retail price).

"It's hard to tell in one month," said Bill Campbell, general sales manager at Nissan of Paducah. "It seems like we've had a little more interest and activity. I think it's great what they've done with the sales tax."

Tripp Purdom, new-car sales manager at Larry Stovesand Buick GMC, was dealing with a customer Monday morning who was aware of the new law.

"As a matter of fact, I'm dealing with a customer right this second. That (the new law) is the only reason he came in," Purdom said. He thinks some customers may not be aware of the change.

"It's a huge savings," Purdom said.

Cliff Kester, general sales manager, Linwood Chrysler-Dodge-Hyundai, said the new law "has made an impact" and agrees not everyone may be aware of it.

"We know about it because we're in the business," Kester said. "I'm sure there are some people who do not know about it."

Gay Williams, president of the Kentucky Automobile Dealers Association, said while the dealers she has spoken to are having a good summer, the impact of the new sales tax law won't be measurable until more time has passed.

Williams said many states that border Kentucky already had the tax credit allowance on new car purchases, and "it seems only fair" that Kentucky car dealers be able to do the same.

Used-car purchasers were already allowed to subtract the value of their trade-in to figure sales tax.

"We've always been able to do that for used cars," Williams said. "We worked very hard (in support of the law) to allow the same formula for a new car. We want to be able to keep people in Kentucky to purchase their vehicle."

Contact David Zoeller, a Paducah Sun staff writer, at 270-575-8676.

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