The SB 131 RV sales tax exemption bill was favorably amended in the Indiana House Ways and Means Committee this week. The Indiana Manufactured Housing Association-Recreation Vehicle Indiana Council reported that the amendment was adopted by a 13-4 vote. The bill as amended was also voted out of committee by the same 13-4 vote.
The amended bill now exempts all sales to out-of-state and out-of-country customers from Indiana’s sales tax. The customers will pay the tax in the state or country in which they register and plate the RV. This also applies to cargo trailers.
SB 131, if passed by the House, will take effect July 1. The bill will remain in effect until 2025. At that point, the state will measure Indiana’s RV sales from 2020 to 2025 to gauge the law’s effectiveness. The measurement will be RV sales figures that are easily tracked by Statistical Surveys Inc.
Ways and Means Chair Todd Huston said this is not a tax policy issue, it is an economic development issue. The thought is by removing the state sales tax impediment on sales to out-of-state and out-of-country consumers, Indiana’s RV sales will grow and the state will see greater economic growth.
Huston acknowledged that if the Economic Impact Statement on the introduced version of the bill is accurate, it might cost the state as much as $1.9 million in tax revenue. The RV industry maintains it might be closer to $800,000 in potential revenue loss due to the old practice of delivering RVs out of state to consumers where Indiana sales tax did not have to be collected.
Huston said the legislature will have to adjust the state budget accordingly. Those supporting the industry believe dealers will recapture much of the market they lost over the years by correcting this tax policy.
The committee report will be adopted on the House Floor today (April 5). It will be eligible for second reading amendments on Monday and will probably receive a final third reading vote in the House on Tuesday.