In deference to the Hoosier State’s recreational vehicle industry, the Indiana House Ways and Means Committee Wednesday (Jan. 18) recommended approval of legislation to restore a full sales tax exemption to consumers who buy RVs in Indiana but live elsewhere.
The committee’s approval was the first step in a process that may take several months to play out.
“We think it’s real important for the state of Indiana,” said Dennis Harney, executive director of the Indiana Manufactured Housing Association/Recreation Vehicle Indiana Council (IMHA/RVIC). “Well over 60% of the RVs made in the United States are produced in Indiana, yet motorized sales were off 30% in Indiana from 2004 to 2005.”
Harney maintains that while motorized sales declined nationwide in 2005, the drop in Indiana was more precipitous, ostensibly due to a change two years ago in Indiana’s sales tax laws. “Before this all happened,” he said, “Indiana was well above the averages for sales.”
The exemption that Hoosier dealers enjoyed for many years was repealed in 2004, either by accident or to put more money into the Indiana treasury, depending on whose version of events is accurate.
A “compromise” approved last year ultimately did nothing to restore what Indiana dealers and manufacturers felt was a needed sales incentive for out-of-state buyers. Rather than paying the 6% Indiana sales tax, out-of-state buyers under the revised rules starting in July paying Indiana only the amount of sales tax they would have paid in the state where they would register their vehicle.
The action gave back to dealers a little — but not a lot — of what was taken away from them when state sales tax laws were changed in mid-2004. Prior to that time, out-of-state RV buyers paid no sales tax in Indiana at all.
Harney, representatives of Coachmen RV Co., Elkhart, and representatives of Tom Stinnett Freedom RV Center, Clarksville, and Best Buy RVs, Richmond, all testified during recent hearings on the legislation to restore the full exemption. “I told them that it’s an economic development issue for the state of Indiana,” Harney said “Sales are off, and that affects sales taxes. Other than the sales figures, it’s mostly anecdotal information from our retailers. But they tell us that this is a major issues for them.”