What's a Jaguar dealer to do?
With a new federal luxury tax scheduled to take effect in just three days, two customers both want the same top-of-the-line, Regency Red sedan sitting on the showroom floor with a sticker price of $51,029.Jon Bell, sales manager for the Stephen Wade Jaguar dealership in Murray, hoped Friday to talk one of the potential buyers into driving home in the same model in Diamond Blue instead.
It probably won't be hard to persuade one of his eager customers that a blue Vanden Plas is just as good as a red one, since either color comes with a savings of more than $2,100 in federal taxes if purchased by the end of the year.
Congress meant for the new taxes on expensive cars and other luxury items that must be charged on cars, boats, airplanes, jewelry and furs starting Jan. 1 to help cut the federal deficit.
But being able to save a 10 percent tax on the price of a car above $30,000 by buying now has been enough of an incentive to set sales records at the state's only Jaguar dealership.
"We're having an unbelievable December," Bell said as salespeople fielded telephone calls and dealt with several customers in the showroom. "Even though it doesn't seem as hectic in here as a Ford dealership, this is busy."
Salesman Guy Merkley expects to top his personal record of selling six cars in a single month. So far this month, a total of 10 Jaguars has been sold at the dealership, each costing between $40,000 and $60,000.
Although Bell and his sales staff can hardly keep up with the sudden demand for one of the most expensive cars sold in Utah, other area businesses selling products that will be subject to the luxury tax aren't so busy.
The head of one of the only luxury boat dealers in the state said it would be foolish for anyone to buy now, even though the federal government will begin assessing a 10 percent tax on the purchase price above $100,000 next month.
"We've got property taxes due in Utah. It'd be ridiculous," Don Robertson, president of Robertson's Marine, said of buying a pricey boat before the end of the year. "Property taxes would probably be more than the luxury tax."
Sales of the most expensive airplanes aren't being affected by the looming tax, either. Steve Ronniger, president of Corporate Wings Inc., said his customers buy jets and turbo-props that start at $2 million for corporate use.
That makes their purchases exempt from the luxury tax set at 10 percent above $250,000 and makes Ronniger wonder why Congress even bothered. "I don't know why they did it. All they did was create more paperwork," he said.
More Utahns buy jewelry and furs than Jaguars, yachts and jets. But they usually don't spend enough at the jewelers or furriers to worry about the new taxes on those items according to local merchants.
"In Utah, most of what we sell is between $5,000 and $7,000. They don't buy really expensive furs," said Nicholas Papadakis, owner of Bulgari Furs in Trolley Square. Furs will be taxed at 10 percent above $10,000.
Ron Dowse, manager of Payne Anthony Custom Jewelers in the same shopping mall, said he has had only one customer buy now to avoid the luxury tax on jewelry, set at 10 percent above $10,000.
That customer spent a little over $12,000 on a two-carat engagement ring. "We don't have a lot of customers spend that much," Dowse said. "We wish we had more."