Senate Bill S7019

                                 BILL NUMBER:  S7019

 TITLE OF BILL :  An act to amend the tax law, in relation to the
taxable price for the sale of a motor vehicle

 PURPOSE :

To provide for the calculation of sales tax for the purchase of a
motor vehicle after a manufacturer's rebate is applied to the purchase
price.

 SUMMARY OF PROVISIONS :

Section 1 amends § 1105 of the Tax Law by adding a new subdivision
providing that any rebate offered by a retail dealer of a motor
vehicle to a consumer at the time of sale shall be excluded for the
purposes of calculating the taxable price of such motor vehicle sale.
The rebate must also be excluded for the purposes of calculating any
local sales and compensating use tax that may be applicable.

Section 2 provides the effective date.

 EXISTING LAW :

Section 1105 of the Tax Law provides for the imposition of sales tax
of four percent upon the receipts from every retail sale of tangible
              

personal property, except as otherwise provided in this article.

Section 1210 of the Tax Law relates to the taxes of cities and
counties administered by the state tax commission and provides,
notwithstanding any other provision of law to the contrary, but
subject to the limitations and exemptions as set forth part II of this
article, any city or county in this state, acting though its local
legislative body, is authorized and empowered to adopt and amend local
laws, ordinances or resolutions imposing in any such city or county
sales and compensating use taxes.

This bill provides that the state sales tax and local sales and
compensating use tax shall be imposed after the rebate is deducted
from the price of the vehicle.

 JUSTIFICATION :

New York State requires that sales tax be paid on the purchase of a
motor vehicle prior to the deduction of a manufacturer's rebate.
However, claiming that rebates are a form of payment from the
manufacturer and therefore do not affect the purchase price of the car
fails to acknowledge the fact that the purchaser, on whom the sales
tax is imposed, is paying a sales price after the rebate is applied.
The "manufacturer's payment" is not subject to any tax. Thus the
purchaser bears the cost for the tax on a payment not actually paid by
them. For example, a consumer who purchases a vehicle and receives a
$2500 manufacturer's rebate that is applied toward the purchase price
will pay an additional sales tax of $200 or more, depending on their
county of residence. This is unwarranted and unfair to the purchaser.

To remedy this unfairness, this legislation provides that all state
and local sales taxes imposed on the purchase of a motor vehicle shall
reflect the post rebate price of the vehicle. This measure ensures
that the purchaser pays sales tax only on what he or she actually pays
as the purchase price.

 LEGISLATIVE HISTORY :

New bill.

 FISCAL IMPLICATIONS :

To be determined.

 EFFECTIVE DATE :
This act shall take effect 30 days after enactment.