DRIVE TIME
State requiring proof tax paid on all cars here
By Mike Leidemann
Advertiser Transportation Writer
Starting tomorrow, Hawai'i drivers who buy cars out of state will have to prove they've paid a 4 percent tax before being allowed to register them here.
Hawai'i buyers have always had to pay the tax on automobiles purchased here. Those who bought a car in a state with a tax less than 4 percent, or where the tax is waived for out-of-state buyers, also were required to pay the tax here. But there was nothing in the law to penalize them if they didn't.
Now, under a law approved this year by the Legislature, out-of-state buyers won't be allowed to put the cars on the road legally without proof they paid the tax.
The new law, passed at the urging of the Hawai'i Automobile Dealers Association, is supposed to be an equalizer of sorts, to make sure local auto dealers aren't at a competitive disadvantage with out-of-state purchases.
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Oregon and California are among the states where Hawai'i shoppers traditionally have gone to get good deals on automobiles and bring them home without paying the extra tax.
Commuting
The auto dealers estimate that about 1,000 cars a year are brought into the state after being bought elsewhere. Last year, out-of-state buyers paid the tax on only 224 vehicles, resulting in collections of about $121,000.
With the average cost of a new automobile about $25,000 this year, the state could have missed out on almost $1 million a year in uncollected taxes, according to Dave Rolf, a spokesman for the dealers.
The new law applies to cars up to 5 years old.
A sliding scale reduces the tax year by year for used autos, but you practically need to be a CPA to understand all the ins and outs of it. The cost of the car, freight charges, insurance, customs duty and depreciation are among the factors that figure into the computation.
Nonresident owners who certify they bought the car at least three months before bringing it to Hawai'i as part of their household goods will not have to pay the tax.
Exemptions also are made for those who receive a car as a gift or bought it from a private seller.
The big change will come at county motor vehicle departments, where the vehicles have to be registered. County officials say they'll ask buyers of out-of-state cars to show proof they've paid the tax. Otherwise, the car won't be registered.
Mike Leidemann's Drive Time column runs Tuesdays. Reach him at 525-5460 or mleidemann@honoluluadvertiser.com.
