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Posted: January 1, 2013 9:00 p.m.

End of ‘birthday tax’ takes effect March 1

Georgians who buy a new or used car after March 1 will pay a one-time title fee instead of a "birthday tax," the annual ad valorem tax included with license tags.
Replacing the ad valorem tax on vehicles was popular with residents and lawmakers alike, but local government officials said they are waiting to see how the new program will work and if the new law benefits them.

The Special Committee on Tax Reform for Georgians and the Association County Commissioners of Georgia worked together on the legislation so counties as a whole wouldn't lose money on the move, although some may lose or gain revenue, according to the ACCG website.

Replacing the birthday tax, part of a larger reform bill, was a popular move for Georgia lawmakers, state Sen. Butch Miller said. Most calls to lawmakers from constituents are about property and ad valorem taxes. The Republican said House Bill 386 passed unanimously in the Senate.

"People are paying significantly more by paying the sales tax and the ad valorem tax," he said.

The new fee replaces both the title and sales tax for a one-time 6.5 percent charge on the purchase. The fee will go up to 6.75 in 2014 and 7 percent in 2015. Those who buy a car between Jan. 1, 2012, and Feb. 28, can opt into the new program and pay either the sales tax or the title fee.

Those who already own a car will continue to pay the birthday tax.

People who buy a car from an individual also are subject to the new upfront title fee. Buyers pay the fee when they register their vehicles and apply for the title with the county.

An August post on Gov. Nathan Deal's blog said the new program will be phased in over 10 years.

Little in the law, except a bit more reporting duties, will affect car dealerships, said Miller, who is general manager of Milton Martin Honda. Taxing personal sales between individuals won't impact dealer sales, either.

"I don't think dealerships really compete with personal sellers," he said.

The state and local governments will split the funds from the new title tax, with local governments guaranteed a base amount of $1 billion, plus 2 percent growth per year through 10 years. The state takes a larger percentage of the funds initially because the ad valorem tax will still be collected on vehicles. The local tax share starts at 43 percent in 2013 and rises to 72 percent in 2022.

 

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