Ferrari

HELENA — Buyers of new luxury cars and recreational vehicles registered in Montana would face a new annual tax of at least $1,500 if their vehicles are worth at least $150,000, under a bill endorsed by a Senate committee on Wednesday.

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.

Dubbed by some legislators as the “Ferrari tax,” the new tax would be on top of the current annual licensing fees already paid by owners of these vehicles under the amendment.

The amendments are now on House Bill 650, sponsored by Rep. Randy Brodehl, R-Kalispell. The full Senate will debate the bill.

Committee members didn’t debate this proposed new tax at all during their discussion of a larger amendment that included the tax.

An estimate showed this tax would raise an estimated $2.5 million in fiscal 2018, which begins July 1, and $3.1 in each following year, although an opponent later questioned those projections. The additional revenue would go for new highway construction projects. Every $1 in state highway funds can attract a $7 federal match.

A total of 984 luxury vehicles and 42 motor homes are now registered in Montana that would meet the age and value requirements and qualify for the tax, Justice Department spokesman Eric Sell said.

Motor Vehicle Division records show at least 20 new vehicles with suggested prices of at least $150,000 are registered in Montana. They are Bentleys, Lamborghinis, Mercedes-Benzes, McLarens, Porsches and Rolls Royces.

Attorney John Bennett of Missoula is opposing the bill and questioned whether those estimated tax numbers would materialize if the tax passes.

The lawyer said he has helped a number of out-of-state clients who have purchased RVs and luxury cars from anywhere and registered them in Montana, one of five states without general sales taxes. Then they store their cars in Montana or somewhere outside of their home states for a “sales-tax test period,” which varies by state. That way they can be “bulletproof” from their states’ sales taxes, he said.

“It can work very well for RVers who want to take a trip out of their states,” Bennett said in an interview. “It can work very well for someone who buys a car that they don’t need to drive (for a period). It’s typically a collectible car.”

If Montana passes the new tax, Bennett 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.”

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