New York State has a humungous budget gap to fill, which is why Gov. David Paterson is trying anything and everything to fill it. Included in his efforts is a proposed 5% tax on vehicles costing over $60,000.

Today, however, $60K isn’t what it used to be in terms of luxury vehicles.  Consumers should keep in mind that this tax isn’t only for vehicles with an MSRP of $60K or more.  If you buy a car that has an MSRP of $50,000, but you throw in a moon roof, GPS, leather seats, and a high-tech stereo system, it may push the price of the vehicle to over $60K, which would mean you would owe an additional 5% tax in NY.  Many cars would fit the bill, such as the Mercedes-Benz E-Class, and the BMW 5 Series.

Yachts are also affected, however the tax doesn’t kick in until you spend at least $200,000.  Private jets will also escape this tax if they stay under $500,000.

The main problem with this tax is that luxury car sales will be hurt, even if just slightly.  Nameplates like Mercedes, BMW and Lexus have experienced a recent drop in sales, just like all of the other carmakers.  Unfortunately, this tax may make people hold off on buying a luxury vehicle and instead hold onto their current vehicles with the addition of an auto warranty.