State Tax Scam On Auto RebatesVirtually all of us pay...


November 08, 1992

State Tax Scam On Auto Rebates

Virtually all of us pay taxes without thought of evasion -- with some reluctance, and without delight -- but we pay because we realize the need to support our government. We expect in return to be treated fairly; we expect that the basis for tax computation to be set with reason and common sense.

The Maryland tax -- call it sales tax or auto titling tax -- which exacts 5 percent of the auto purchase price bases the tax not only on the actual cash price of the auto but also includes unfairly the so-called manufacturer's "rebate."

The manufacturer's rebate is a reduction in price which is offered to the buyer before the transaction. The buyer is given to understand that the actual cash purchase price will be reduced by the amount of the rebate. This price reduction induces the buyer to make the purchase just as a price reduction on any other commodity would enhance a sale.

Yet the state instructs auto dealers to base the state excise tax on the fictitious "sales price" before the rebate deduction is made. The state legal people attempt to justify this with a lot of balder-- which seems to confuse even them. . . .

Until recently, auto dealers using the Maryland state mind-set applied the federal luxury tax so as to include the rebate as a basis. A luxury car buyer objected to this and contacted the IRS' Technical Department in Pittsburgh, which acknowledged the impropriety and ordered the amount of the luxury tax which was collected by the dealer on a $2,000 rebate to be refunded to the buyer. . . .

This rip-off by the state is not penny-ante. The 300,000 cars sold in Maryland every year with an average rebate of $1,000

amounts to a figure of $300 million. The tax on this amount at 5 percent is $15 million and is taken unfairly from the pockets of Maryland car buyers -- you and me . . .

Please contact your state representative and urge him or her to ** initiate steps to correct this unfair practice.

Arthur B. Lego


Amend City Code


I write to urge you to consider amending the Westminster City Code as it applies to zoning matters. As you know, the city's code provides an unusual restriction on the right of citizens to discuss legislative matters with their elected representatives.

Although piecemeal zoning actions require the council to act in a quasi-judicial capacity, the same would not be true for text amendments to the ordinance if it were not for the city's code provisions. Common sense and representative government warrant a change that allows citizens to voice their position and discuss their concerns with their elected representatives.

As an example of the predicament imposed by the current restriction, the council heard Michael Day present a position with respect to a proposal for a Historic District. Mr. Day was incorrect in many respects and presented a position which is not necessarily supportable. Although he was allowed to misrepresent the historic district law, I was advised that because I am a citizen of Westminster, I could not attempt to set the record straight. . . .

In my day job, I wrote Mr. Day raising similar issues with respect to similar interpretations of the law which he has made. Mr. Day has chosen not to respond to that letter written half a year ago, nor has the Attorney General given his opinion on these fairly complex legal issues . . .

My concern is that the city has a law which prohibits the free discourse on this important piece of legislation. I ask you to amend the City Code to allow the citizens of Westminster an opportunity to discuss legislation with their elected representatives in the same manner as we do with members of Congress, the General Assembly and the county government.

Charles W. Thompson, Jr.


The writer serves as counsel for Carroll County government.

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