Auto dealers push for change in law on car leasing

Nov 4, 2013

Auto dealers in Illinois are pushing for a change in the law on car leasing. Supporters of the plan say it would lower the cost of a lease, in some cases by sixty dollars a month. IPR'S Brian Mackey has more:

Under current law, when you lease a car, there's a good chance the company is collecting sales tax on the full value of the vehicle. Those companies, however, through a complicated system of dealer credits, might only pass on a portion of that to state tax collectors.  

Joe McMahon, a lobbyist for the Illinois Automobile Dealers Association, says the system has kept leasing from taking off in Illinois like it has elsewhere.

"In other states throughout the country, it's close to 25 percent of all transactions. In Illinois, we're only at 10 percent."

That's why the dealers are supporting the change in law. Instead of the full value of the vehicle, customers would instead pay tax on their monthly payments. The dealers say lease customers are very sensitive to the bottom-line monthly price, so they expect the change to attract more business.

After long opposition and lengthy negotiations, the Illinois Department of Revenue supports the change.