Proposed hike in vehicle registration fees concerns auto dealers - KWWL - Eastern Iowa Breaking News, Weather, Closings

Proposed hike in vehicle registration fees could put a dent in Iowa's auto business

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INDEPENDENCE (KWWL) -

A bill to raise Iowa's fuel tax is one step closer to becoming law.

Wednesday the Senate Transportation Committee passed their version of a gas tax hike. The legislation would bump the current excise tax on motor fuel by ten cents over two years -- putting it at about thirty cents by 2014.

The House passed a similar bill through committee this week, but their version includes an increased fee for registering a new vehicle and a proposed annual registration fee for hybrid cars.

Jim Roper is preparing to spend tens of thousands of dollars on a new vehicle.

"Looking for a newer pickup. It's time to upgrade a little," Roper said.

While the bulk of that is financed, he'll have to pay the new registration and use tax out of pocket. If some House Representatives have their way, that tax will jump from five percent to six percent of the purchase price.

"It's definitely going to make a difference in what I'm looking at buying, what I can afford to buy, what I'm willing to buy," Roper said.

Dunlap Motors General Manager Fred Smock has a feeling other buyers will have the same reaction.

"I was around back when it went from three percent to five percent, and it did slow down sales for awhile," Smock said.

Smock believes the proposed new registration and use tax increase would definitely have an impact on his business. But he says, at least temporarily, that impact could be a positive one.

"It actually does increase our business for a little bit. Because, it'd come into effect July 1st. So people would hurry up and buy the car and save themselves the one or two percent," he noted.

Smock believes, sales would drop for a few months after the law took effect, then eventually even back out. But a proposed annual registration fee of $50-$100 for hybrid and electric cars would put a consistent dent in his business.

"You know, they pay you $6,500 tax credit to buy one of these cars. And now they want to tax you for owning it," Smock said.

"Doesn't make sense to me because the hybrid vehicles, they're light, they're not tearing up the roads," Roper agreed.

But Roper is hoping he won't have to worry about a gas tax hike when he's ready to buy -- gas prices have him worried enough.

"They're talking about gasoline being up to $5.00 a gallon by summer. I don't think the citizens of the state are ready to put extra taxes on top of it," he said.

Iowa Department of Transportation estimates every penny raised generates $22 million for the road use tax fund. The DOT reports the state needs an additional $220 million just to address the most critical highway problems.

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