What is excise tax and do I have to pay it on a used vehicle (from a dealer)?

Question

I am planning on purchasing a used domestic vehicle, from a dealer, and there is a excise tax on the bill of sale. Do I have to pay it? Or can I negoiate it off?

I apologize - I forgot to mention that I am located in Canada. Thanks to those that responded from the US. The excise tax is probably similar in both countries.

Answer 1

Excise tax is a tax that the state collects, based on the value and age of vehicle, when registering/ plating your vehicle. Here in Indiana, the owner pays it annually upon renewing their vehicle's registration/ license plate, Not Paid to Dealer...

Answer 2

Excise tax is collected on the purchase price in lieu of the state sales tax. No, you don't have to pay it, just like you don't have to buy the car. But if you do, yes, you have to pay it.

The following is specific to MA, but most states are similar:

Every motor vehicle owner must pay an excise tax based on valuation of at least ten percent of the manufacturer’s list price; thus, owners of vehicles older than five years should have a fixed excise tax bill for succeeding years of ownership. Even though an owner may have applied for an abatement that may reduce an excise tax bill, no excise shall be less than $5.

Answer 3

The dealer may come down in price (most do)but by law a car dealer has to pay the taxes on the car so try talking him down on the price.(It is nothing to get a used car price down by at least 15%)

Answer 4

"Excise," in England and in the Colonies, for at least one hundred and forty years before it was used in the Constitution, meant an inland levy on selected tangible property, or upon the owners of it, because of the activity in which the property was moving, as in the manufacture, in intermediate sale, or in the ultimate sale commonly amounting to consumption. The antithesis was the direct tax upon property in general, certainly land, when taxed on a rate fixed by its static appraised capital value, possibly when measured by its annual unwrought return in rent, income, or products, and, debatably, upon personal property so appraised or judged. Both the direct tax and the excise were preeminently property taxes, -- one regardless of its activity or inactivity, and the other taking that activity into consideration. In 1766 Dr. Johnson defined "excise" as "a hateful tax levied upon commodities, and adjudged not by the common judges of property." Dict. (3d ed., 1766). He defined "commodity" as "interest, advantage, profit, convenience of time or place, wares, merchandise." Id. "Commodity" suggests, as the principal thought, merchandise. In 1776 Adam Smith in his "The Wealth of Nations" said, "The duties of excise are imposed chiefly upon goods of home produce destined for home consumption. They are imposed only upon a few sorts of goods of the most general use." In 1780 the Massachusetts constitution indicated direct taxes to be the normal source of revenue, but gave the legislature authority to impose "reasonable duties and excises, upon any produce, goods, wares, merchandise, and commodities, whatsoever." In 1788 the Constitutional Convention of New York urged an amendment to the Constitution "That the Congress do not impose any excise on any article (ardent spirits excepted) of the growth, production, or manufacture of the United States, or any of them." 1 Elliot's Debates 72; Luther Martin said "By the power to lay excises, -- a power very odious in its nature, since it authorizes officers to go into your houses, your kitchens, your cellars, and to examine into your private concerns, -- the Congress may impose duties on every article of use or consumption, on the food that we eat, on the liquors that we drink, on the clothes that we wear, the glass which enlightens our houses, or the hearths necessary for our warmth and comfort." Cf. Chancellor Livingston in the New York Convention, 2 id. 341; Nicholas in the Virginia Convention, 3 id. 243; also 5 id. 40; Hamilton, Federalist, No. 21, p. 182; Ellsworth, Connecticut Convention, 2 Elliot 192; Writings of Gallatin, p. 73.
Excise in India-- It is a tax on the manufacture of goods that is levied when goods leave the place of manufacturer. Manufacturers can set off the duty paid on input materials against their output duty a procedure known as Central value added tax (CENVAT).


[edit] Notes
^ By contrast, taxes on property by reason of ownership, as well as capitations (head taxes), would be considered direct taxes in the U.S. constitutional law sense.
^ In effect, all Federal income taxes were considered excises -- in the constitutional sense -- until the 1895 U.S. Supreme Court decision in Pollock v. Farmers' Loan & Trust Co.. After Pollock, and until 1913, taxes on income from property were treated as direct taxes, while taxes on income from labor (and all other sources) continued to be considered excises. Since the ratification of the Sixteenth Amendment in 1913, all taxes on incomes, regardless of the sources of the incomes, are again treated as excises (not direct taxes) in the constitutional sense.