BIRMINGHAM, AL (WBRC) - A key Birmingham City Council committee has approved an incentive plan to attract car buyers to dealerships in the city.
Under the plan approved by the Budget and Finance Committee Monday afternoon, the city will rebate 1% of new car sales back to dealers in exchange for dealers forwarding .25% of used car sales money to the city. That will allow dealers to sell new cars at what is essentially a 1% sales tax rate, the same rate charged in most of the surrounding cities and the rate charged in Birmingham before the council and Mayor Langford raised the sales tax in 2008.
"They'll be able to use that as a tool to level the playing field," said assistant city attorney Jim Stanley.
Dealers are telling the city they have lost sales to surrounding dealerships and the economy is increasing the pressure to reverse that trend.
"We haven't had any particular dealers say 'yes we're gonna move out if we don't get this." Stanley said. "We do know some dealers are under pressure to move to more fluid areas, this gives them another competitive tool in the city."
The city has set aside almost $3 million for the incentive plan to start with, but city attorneys think it will pay for itself by bringing car sales and sales taxes back to the city.
"All of a sudden we see the outer-lying areas competing for the business we had already made a big investment in with incentives," Council President Carole Smitherman said. "So for me it's just making certain that our investment is good and we're protecting our investment we have."