Tuesday, 11 November 2008 16:08

CA Governor Proposes Sales Tax on Automotive Repair

California Governor Arnold Schwarzenegger has proposed a new plan to address the state’s budget deficit that includes charging sales tax on automotive repairs, which will include taxing labor on collision repairs.

The CAA has partnered with other automotive associations to jointly respond to the Governor’s proposed tax plan in a letter sent on November 4th to the Governor (letter posted on CAA website). In addition to the CAA, California Automotive Business Coalition, California Automotive Wholesaler’s Association, Automotive Aftermarket Industry Association, Automotive Service Councils of California, and California Service Station and Automotive Repair Association all signed the letter opposing the automotive repair tax.

The state of California is facing an $11.2 billion shortfall and the Governor is proposing drastic and immediate action to address this crisis. The Governor is proposing $4.5 billion in cost cuts and $4.7 billion in new revenues for the current-year budget which will ensure the state can protect vital services. His proposal calls for a temporary, three-year increase in the state sales tax, from 5 percent to 6.5 percent, along with broadening the sales and use tax to include certain services like automotive repair.

The Governor is proposing broadening the Sales and Use Tax to the following services beginning February 1, 2009: appliance and furniture repair, vehicle repair, golf, and veterinarian services.

The CAA will be working hard lobbying against the automotive sales tax on labor. We feel that sales tax on labor on collision repairs could contribute to more vehicles being totaled and a financial burden on the consumer on deciding to repair their vehicle. Earlier this year the CAA and other groups were successful in stopping this tax but we need to continue to aggressively oppose this tax.

The CAA is asking its members to call the Governor’s office ( 916-445-2841) and your legislators to oppose this tax.

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