Mark Bilek, senior director of communications for the Chicago Automobile Trade Association (CATA), fears that the trickle-down effect from a new Illinois law that caps trade-in tax credits on most motor vehicles at $10,000 could have devastating consequences for the industry.
“This could impact things in a couple ways,” Bilek told the Chicago City Wire. “One, it could delay people buying new vehicles because they want to wait until the value of the trade falls below the threshold. It could also change the vehicles that are under consideration. People might consider vehicles that cost less so they have less exposure to the tax. This is a tax on the consumer, a kind of hidden tax you don’t know about until you go buy the vehicle.”
The new law is slated to go into effect on Jan. 1 and estimates are that it could ultimately cost car buyers up to $40 million in added sales tax. Between now and then, Bilek said, CATA plans to do everything in its power to stop the legislation in its tracks.
CATA senior director of communications Mark Bilek
“Chicago Auto Trade Association and car dealers across the state are working on ways to mitigate this tax,” Bilek said. “We’re talking with legislators as well as working directly with the Illinois Department of Revenue in looking at other ways to come to up with revenue. We’re looking at any way that works where consumers don’t have to foot the bill for this.”
According to the Daily Herald, car buyers are currently only obligated to pay sales tax on the difference between the value of a new car and the value of the car they're trading in. The tax is based on the city where the car buyer resides, with those within Chicago's city limits paying a tax rate of 9.5 percent.
The new tax is just one of at least 21 provisions put in place as part of Gov. Pritzker’s new state budget in which taxes or fees are being raised to cover the $45 billion needed for his Rebuild Illinois capital spending plan.
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