An area lawmaker will take another shot at exempting out-of-state recreational vehicle and cargo trailer buyers from Indiana’s sales tax in the upcoming General Assembly session.
State Rep. Tim Neese, R-Elkhart, said he will sponsor a bill that will remove the state’s 7 percent sales tax for people who come to Indiana to buy RVs and cargo trailers. Indiana already has reciprocal agreements with 41 states that allow out-of-state buyers to receive a credit against their home state sales tax for Indiana sales tax they pay.
Although Michigan is not one of those states, it still offers the credit to its residents who buy RVs in Indiana, said Russ Fish, finance manager at Total Value RV of Indiana in Elkhart.
Some states have no sales tax, while others have sales tax rates that differ from Indiana’s, and still others have varying rules on the size of the sales tax credit they will allow back home when the buyer registers the vehicle.
“(A sales tax exemption for out-of-state buyers) would make life a lot easier and I think we would sell a lot more because it cuts out a lot of the Mickey Mouse stuff,” Fish said. “But I can see Indiana’s point of view. That’s a loss of money.”
Because RVs can cost so much, they can generate significant sales tax revenue for the state. For example, 7 percent of $300,000, the cost of a high-end RV, creates a $21,000 tax. The exemption would have cost the state from $2.7 million to $5.4 million this fiscal year, according to an analysis by the Legislative Services Agency.
The exemption was the law until 2003, when the law changed because of a court case. Since then, Elkhart area legislators have repeatedly tried to reinstate the exemption, most recently in the 2013 session, when it died in the House Ways and Means Committee without receiving a hearing.
“I’m not sure many (General Assembly members) understand the importance of the RV industry to Elkhart County,” Neese said. “I’ll be working closely with the manufactured housing and RV lobbying community and try to be more available to answer questions of my different colleagues in the House.”
The General Assembly’s next session begins Jan. 6.
Fish, who estimated that 80 percent of Total Value RV’s sales come from out of state, said the exemption would simplify the sales process for Indiana RV dealers. Sometimes confusion is enough to kill a sale, he said.
“With the Internet the way it is today, people can shop all 50 states and find the best deal, taking into consideration the taxes,” Fish said. “It takes a lot of the cloudiness out of it.”