Phone: 630-495-2282 Fax: 630-495-2260 Map/Directions

AIADA chairman: Proposed border tax a real threat to dealers

December 30, 2016
By Greg Kaminsky, 2016 AIADA chairman
In the weeks following the election, many dealers, myself included, have been optimistic at the prospect of new policies and legislation that will help our businesses succeed. Reining in the Consumer Financial Protection Bureau and making it easier to do business is high on all of our priority lists, and it looks like we have more allies in Washington on our side heading into 2017.
Funnily enough, as we head into the New Year, the biggest danger facing international nameplate dealers isn’t from the CFPB, the Trump transition team, or even a trade issue. It’s a new import tax. And it’s a real threat to every single dealer in the United States.
A border adjustment tax is included in the House Republican’s Better Way Tax Reform proposal. While no official legislative language has been released, the tax likely sits at 20 percent and is a crucial piece of the proposal, paying for many of its popular cuts. Some members of the House Ways and Means Committee see a clear path for the tax bill through Congress and to President Donald Trump’s desk in the first 100 days of the 115th Congress.
What is a Border Adjustment Tax? It’s a simple, across the board tax on any goods or services coming across the border and into the United States. The idea marries well with some of the ideas Trump espoused on the campaign trail, and could be popular with Americans who worry jobs are being lost overseas.
That is, until they go to buy a car.
See, the BAT would apply to every vehicle built outside the U.S. border — even Canada, which has long been considered "domestic" under the quirky 1994 American Automobile Labeling Act. Auto parts would also be subject to the tax, so even the most American-made vehicle sold in the U.S. today — the Toyota Camry — would be subject to a significant price increase.
As dealers, we would dearly love to see some sensible tax reform legislation go into effect. A simpler, more business-friendly code would do wonders for America’s small business owners. However, a Border Adjustment Tax could be devastating to our business model, and to consumers who look to us for affordable, safe means of transportation. 
It could immediately result in reduced sales and dealership job loss, more expensive repair costs (and, accordingly, less safe roadways), and consumers priced out of the new-car market.
A BAT is bad for the car business, bad for consumers, and bad for America. This issue is at the top of the American International Automobile Dealers Association’s legislative agenda. As we work in Washington, D.C., to educate legislators on this important topic we will continue to keep you informed and involved.