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      02-17-2008, 04:53 PM   #1
BasicMarinWheels
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Gas Guzzler Tax - Leasing

I will be leasing.

Does the gas guzzler tax get added to the capital cost and spread out over the term of the lease? If so, and assuming the residual is, say 60%, you end up paying 40% (plus finance charges, of course) of the $1,300 tax, right?

Or do you have to pay it separately, up front, like title/license fees?
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      02-17-2008, 05:34 PM   #2
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I paid one for my old Audi S6 (which I leased). You have to pay it up front or spread the entire GGT over the lease term. In any case, you have to pay the whole amount.
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      02-17-2008, 05:36 PM   #3
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yah.. spread over the lease
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      02-17-2008, 06:16 PM   #4
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I ask because sales tax, at least in California, is calculated based on your payment amount. So, for example, in my current BMW, since my residual is 64% percent, I only pay sales tax on 36% of the car (the monthly payment amount is about $500, so my tax, at 8.25% is only about $40/month). In the end, I only pay sales tax on the portion of the car I've "used up" (i.e., 36%).

So, on a 3 year lease, with a 64% residual, why wouldn't I just pay 36% of the $1,300 tax? That would be about 1% per month, or $13 per month. Then, the next owner of the car would pay the rest (64%).

So, I guess what I'm asking is, are you sure I have to pay the whole thing?

It just doesn't seem right (or, if it's right, it doesn't seem fair). Why would the initial purchaser pay the whole tax when "consuming" only part of the car? Then, either the subsequent owner pays it again (double taxation), or pays nothing (getting a free ride on the initial purchaser/lessee's back).
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      02-17-2008, 06:32 PM   #5
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That doesn't seem fair, but that is also why people buy used cars so they can save some money.
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      02-17-2008, 10:17 PM   #6
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Exactly right. If you buy a car with GGT and then sell it, the second buyer doesn't have to pay the tax even if you owned the car for a few months or a few years. Thus the first leasee has to pay the entire GGT.

I was bummed to pay the entire GGT on the S6 but there was no way around it. I'm not sure how the CA tax would work. Seems like you probably wouldn't have to pay tax on a tax but I haven't looked into that for the M3 I'm hoping to order once my number comes up.
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      02-17-2008, 10:29 PM   #7
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Quote:
Originally Posted by WCH View Post
Exactly right. If you buy a car with GGT and then sell it, the second buyer doesn't have to pay the tax even if you owned the car for a few months or a few years. Thus the first leasee has to pay the entire GGT.
I am assuming this is somewhat reflected in the resale value of the car though, right?
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      02-17-2008, 10:35 PM   #8
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Not sure about that. Cars with GGT tend to be high powered, low volume cars to begin with so it's hard to get a comparator. A BMW 550 has a GGT and I think the 535 doesn't so perhaps that is a useful comparison with regard to resale. My gut feeling is that it probably doesn't end up counting for much in the resale value because of all of the other confounding issues but I might be wrong.
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      02-19-2008, 10:37 PM   #9
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I am glad I saw this form. So, we have to pay tax on a tax? I am asking because I am in the same boat right now. I got my invoice today, and they added it on before sales tax, than charged me sales tax for it. That does it NOT seem legit. tax on tax?
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      02-19-2008, 11:00 PM   #10
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That doesn't seem right. I would ask them about this. It seems to me that the gas guzzler tax has to be paid in full but should not be taxed. The issue might be that in a lease if you spread the ggt over the lease term you have to pay interest and tax on the whole amount.
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