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Spreading out vehicle lease tax

Published (3/16/2012)
By Mike Cook
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The entire sales tax on long-term leases for most motor vehicles is owed when the lease is executed. That tax could become part of each lease payment.

Approved March 12 by the House Transportation Policy and Finance Committee, and sent to the House Taxes Committee, HF2032 would allow customers to pay the sales tax on certain rent-to-own and lease-to-own used motor vehicles incrementally.

“There are only three states in the country that assess sales tax on used car leases and Minnesota is the only one of the three that assesses it all up front,” said Rep. Pam Myhra (R-Burnsville), the bill sponsor. “Basically what that does is it kills this line of business in our state.”

Myhra said the bill would create more jobs, and it would provide better transportation options for those who can least afford it because they won’t need to pay an extra lump sum up front.

Dan Blowers, chief operating officer for Northland Auto Enterprises, which does leasing in 47 states, spoke on behalf of the bill.

“It’s good for the customers; it’s good for the dealer; it’s good for jobs for Minnesota. There really is no downside,” he said.

A companion, SF1636, sponsored by Sen. Al DeKruif (R-Madison Lake), awaits action by the Senate Transportation Committee.

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