The House overwhelmingly backed legislation Thursday to phase out property taxes on cars, known as the Birthday Tax because it’s due on the owner’s birthday.

However, some Democrats argued that the bill, which passed 133-39, would amount to a tax increase on average Georgians who don’t use dealers to buy cars.

Under the legislation that still needs Senate approval, people who buy vehicles starting next year won’t pay property taxes on those cars. They also wouldn’t pay a sales tax they’d normally pay if they bought from a dealer. To replace those taxes, all buyers will have to pay a fee of 7 percent, up to a maximum of $2,000, when they title their vehicles.

Georgians who keep their present cars will still have to pay the annual property taxes until they buy another one.

Currently, there is no sales tax on person-to-person, or “casual” sales of cars, so the title fee will capture money from those buyers.

House Motor Vehicles Chairman Tom Rice (R-Norcross) said there are 900,000 person-to-person or “casual sales” of cars and trucks each year in Georgia.

“This is going to be fair to every one of us who buys a car,” Rice said.

Some Democrats agreed.

“This is more fair to more people,” said Rep. Mary Margaret Oliver (D-Decatur)
 

Rice said the title fee will raise more than the current system, providing extra money for local governments and $100 million to $150 million for a new state trauma care system.

Read this blog post by James Salzer from the March 12, 2009 Atlanta Journal-Constitution.