VALDOSTA — County revenue is struggling to keep up with the price to provide public services and, according to the county officials, a large part of that is due to the Title Ad Valorem Tax.

One problem with TAVT, at least where the county is concerned, is it allows car dealers to manipulate how much a buyer has to pay in taxes, if that buyer has a trade-in vehicle. With a trade-in, a buyer could potentially get out of paying any tax on a vehicle.

TAVT was implemented in 2013 and replaced the sales and use tax and the annual ad valorem tax, also known as the holiday tax. Instead, anyone purchasing a vehicle in Georgia pays a one-time lump sum based on the value of the vehicle.

According to Clay Griner, Lowndes County commissioner and vice president of Griner Automotive, the amount of TAVT a person pays when buying a vehicle is not based off the buying price but is instead based off an arbitrary number determined by the state.

“You shouldn’t be able to manipulate the tax on something,” Griner said. “It ought to be what it is. It should be the difference between the selling price and the trade-in value and not some fictitious number the state said this should be what you tax it on.”

How this works: if someone is selling a 2012 Chevrolet Silverado, for example, the state determines the vehicle is worth $18,750 regardless of what condition it is in or how many miles it has on it. The tax is then determined by taking 7 percent of $18,750, which is $1,312.50.

“A Silverado with 175,000 miles on it is worth less than one with 25,000 miles on it,” Griner said. “The values of these cars is much different from what the state says it is.”

How much taxes a person pays on a vehicle is not determined by the price determined by the dealership. If the dealership puts the Silverado at a higher price, the buyer pays comparatively less tax, but if the dealer puts the vehicle at a lower price, the buyer pays a comparatively higher tax.

The tax doesn’t change based off the buying price. It stays $1,312.50.

However, when the buyer adds a trade-in to the mix, things can lean more in the buyer’s favor and really hurt the county and state. The trade-in price comes directly out of the state’s arbitrary $18,750 price. If the buyer has a trade-in worth $2,500, then the amount is taken out of $18,750, therefore reducing the TAVT to $1,137.50 from $1,312.50. 

But the dealership determines the value of the trade-in. If the dealership wants, it can mark the trade-in value at $18,750 and reduce the TAVT to nothing.

Griner said the Georgia Department of Revenue knows about the potential abuse but has done nothing about it. He said he doesn’t know of any car dealerships manipulating TAVT but he can imagine there are some doing it.

If a potential buyer comes to a dealer asking for a lower price, why wouldn’t that dealer make it so the buyer could pay a lower tax rate to get the sale, he said.

“It’s not illegal,” Griner said. “It’s unethical but it’s not illegal.”

Thomas Lynn is a government and education reporter for The Valdosta Daily Times. He can be reached at (229)244-3400 ext. 1256