Silverthorne residents in the market for a new vehicle may be able to save themselves a little coin if they can hold out until July before making a purchase.
Beginning July 1, purchases of cars, trucks and motorcycles licensed for public street use at local car dealerships could be exempt from Silverthorne’s 2 percent sales tax if an ordinance is approved by the Silverthorne Town Council later this month. The ordinance passed unanimously Wednesday, March 13, on first reading. The 2 percent exemption only applies to town residents who buy from Silverthorne dealerships and register their cars in Silverthorne.
Silverthorne residents who buy a vehicle at local dealerships are now taxed at a rate of 7.775 percent, which includes 2.9 percent in Colorado state tax, 2 percent in Summit County tax, .75 percent in Summit County Transit tax, 2 percent in town of Silverthorne tax and .125 percent in Summit Combined Housing Authority tax.
Silverthorne finance director Donna Braun said sales tax rates throughout the state of Colorado vary depending on whether the jurisdiction of registration has a use tax.
However, Silverthorne and Summit County do not have a use tax, which means local residents could save money by buying a car out of town. Silverthorne dealers have said the current tax structure provides residents little incentive to pay more to shop locally and puts Silverthorne dealers at a competitive disadvantage with car retailers on the Front Range.
“Vehicles are essential purchases for most households, and next to housing a vehicle is the biggest purchase for many families,” said Councilwoman Ann-Marie Sandquist. “We took this action to get closer to a level playing field with the Front Range dealers, from a taxation perspective, for our three local dealerships.
“This will help those Silverthorne residents who want to purchase the makes of vehicles offered by our local dealers.”
According to a report compiled in 2012 by town of Silverthorne staffers, local dealerships sold 1,000 vehicles in 2011. Of those, 38 were purchased by town residents and businesses and 374 were purchased by residents and businesses in Summit County. The town sales tax revenue generated by those 38 local buyers amounted to about $30,000.
Although the town is setting itself up to potentially lose those funds, officials believe dropping the sales tax will increase vehicle sales and drive up revenue from other sources, namely from the county’s 2 percent sales tax, which is remitted to Silverthorne.
“The idea is that we think more Silverthorne buyers who want those particular makes of cars will decide to buy in Silverthorne once the tax is gone,” said Silverthorne town manager Ryan Hyland. “We’re hopeful over time it will amount to a zero net loss in funds.”
According to the Colorado Taxpayer Bill of Rights, once the exemption is approved on second reading and after it goes into effect July 1 it will be permanent. Should a future town council body decide to reinstate the sales tax on vehicle purchases, it would require a vote of the people.
“We took this action to get closer to a level playing field with the Front Range dealers, from a taxation perspective, for our three local dealerships.”