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Car Tax Goes Into Effect July 1st

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Beginning July 1, you will have to pay more sales tax to buy a car in Oklahoma. During the last days of session, lawmakers approved the 1.25-percent increase.

Car dealerships across the state are suing the state to try to stop this from taking effect - saying lawmakers didn't have the necessary supermajority to pass a new tax and the bill passed after the deadline for raising revenue. The state counters this isn't a new tax but a repeal of a sales tax exemption.

Sharon Harper just bought a new car Wednesday. She knew the sales tax was kicking in in just days so she shifted her buying process into high gear.

“I was looking for a new car, but that made me come on in,” Harper said.

At Battison Honda, they say a lot of buyers who are aware of the pending tax have done the same.

“Especially the last two weeks we had a spike in sales,” said Battison General Manager Artie Bryley.

Battison is a plaintiff in the lawsuit against the state. Bryley said their biggest concern is the tax is an upfront cost.

“We face this every day, they sit down and say how much money do I need to put down? Because obviously everybody's got their budget and what people can and cannot afford.”

Obviously, how much extra in sales tax you pay depends on the price of the car. For example a $33,500 car would come out to about $418 in sales tax. A car closer to $20,000 would be about $287 in tax. A more expensive vehicle like a $60,000 pickup truck would be closer to $750 in tax.  

“It will ultimately put a lot of people on the sidelines that will say they just won’t buy a vehicle,” Bryley said.

Bryley predicts this could hurt state revenues, but the state is counting on the extra revenue from the sales tax exemption to bring in an additional $123-million next fiscal year.

Oral arguments on the lawsuit are scheduled for August 8.

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