Dealers wage all-out assault on Border Adjustment Tax
Dealers from NADA, AIADA (American International Automobile Dealers Association) and NAMAD (National Association of Minority Automobile Dealers) are organizing a major grass-roots effort to defeat a Border Adjustment Tax (BAT) proposed in the House Tax Reform Blueprint in December.
AIADA is organizing a dealer fly-in March 8-9 for its members to visit their members of Congress and ask them to stop the BAT. AIADA says the BAT is a new consumer tax on all goods or services, including autos and auto parts, coming across our border into the United States from all nations, even those with which we have existing trade agreements. Auto parts would be subject to a BAT, so even the most American-made vehicle sold in the U.S. today [Toyota Camry, 75 percent American-made] would be subject to a significant price increase.
No hearings have been held and no official legislative language has been released, but AIADA says the tax will likely be 20 percent.
Quite clearly, this is an issue for every dealer, wrote NADA Chairman Mark Scarpelli, because it could affect the vehicle affordability problem already confronting the vast majority of our customers. Affordability generates fleet turnover, which drives a big portion of our economy. Our nation canêt afford to adopt any policy that causes demand destruction.
AIADA President Cody Lusk reiterated this point. We already have an affordability issue with the auto industry, he said. Weêre already pushing it with consumers, with the average payment going up and loan terms being stretched out.
The tax would not only affect the auto industry, though that is one of the major industries that would be hurt. Groups representing a number of businesses and different industries have all voiced serious concerns about the potential for a BAT to lead to higher costs for a wide range of goods and services costs that could ultimately get passed down to American consumers, NADAês Scarpelli wrote.
NADA joined dozens of other business groups in sending a letter to the chairman and ranking member of the House Ways and Means Committee voicing concerns about the BAT. The letter warned that companies that rely on global supply chains would face huge business challenges caused by increased taxes and increased cost of goods, which would in turn likely result in reductions in employment, reduced capital investments and higher prices for consumers.
Toyota has publicly opposed the proposed tax and urged its dealers to do so. A report by Baum & Associates said automakers would have to raise their vehicle prices an average ranging from $282 for Ford to $17,204 for Jaguar or Land Rover if the tax were imposed. The estimated increase is $1,312 for Honda and $2,651 for Toyota. The estimated price increases were reported in Automotive News.
I encourage every dealer to take advantage of opportunities to engage with their members of Congress, either at home in their dealerships or in Washington, Scarpelli wrote. Members of Congress are on recess and, in many cases, in their districts the week of February 20.Download Bulletin PDF