Cars Blog

Last Monday, the United State Senate reached an agreement that loan interest and sales taxes collected from vehicle purchases will be deducted from the federal income taxes. The proposal was made by the National Automobile Dealers Association. The figures for the vote were 71-26.

The provision does not belong in the House-passed adaptation of over $800 billion package of the reductions in taxes and increases in spending. A decision by the conference committee is yet to be made as to whether the provision will stay or not. President Barack Obama prioritizes this bill.

Once the measure is passed, car loan taxes will be made deductible—a first since 1986. If the provision remains, the deductibility of interests in loan will be the first important step meant to bring old and new consumers into automobile showrooms.

The increase in purchases will definitely receive action from Congress. According to the National Automobile Dealers Association, the provision will make the consumers save approximately $1,500 on a vehicle that is worth $25,000.

There are some experts who openly argued that the provision is not strong enough at the forefront, stressing that cuts on tax bills to be made for the future do not really worry potential car buyers. But the NADA spokesman said that the provision will become an important motivation for car buyers and that their organization just has to work on what they think could be attained politically.

Car manufacturers appreciate the moves but are still on a waiting game how the market will respond.