Proposed Excise Tax Bill Would Cut Maine’s Tax On New Car Purchases

2018 Chevy Pickup Truck

2018 Chevy Pickup Truck. Photo courtesy

AUGUSTA – Who pays the full manufacturer’s list price for a new car or truck? Pretty much nobody. Regardless of that reality, in Maine the law says you still have to pay excise tax on that full manufacturer’s price, no matter how good a deal you got on your new car.

But that may be about to change. A bill, titled “An Act To Amend the Laws Governing the calculation of Excise Tax on Automobiles” and numbered LD 1687, proposed by Senator James Dill and co-sponsored by a group of Legislators from both political would change state law to require Mainers to pay the excise tax on the actual purchase price of new cars and trucks instead of the list price for the first or current year of the model.

After the first year, the excise tax would still be calculated on the manufacturer’s list price instead of purchase price.

Excise tax laws have been notoriously difficult to tackle in Augusta, as Maine towns keep the revenue toward their local budgets and mostly use the revenue toward local road repair and maintenance.

Current excise tax methods have been in place more than 85 years.

An example of the change is as follows:

CURRENT: You purchase a new car with an MSRP of $24,500. You get a discount and only pay $22,500. You still pay tax on the MSRP of $24,500 at 24 mills. ($24,500 x .0240) You pay $588.

PROPOSED: You purchase a new car with an MSRP of $24,000. You get a discount and only pay $22,000. Under the change, you pay tax on your purchase price of $22,000 instead of the MSRP at 24 mills. ($22,000 x .0240) You pay $528.

You save $60.

State law currently sets the excise tax mill rate as follows:

Year 1: .0240

Year 2: .0175

Year 3: .0135

Year 4: .0100

Year 5: .0065

Year 6: .0040

Although the bill has co-sponsors from both parties in both chambers of the Maine Legislature, passage is not guaranteed.

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