This idea is being promoted as a way to help catch and help put unlicensed used car dealers or "curbstoners" out of business. The cars they sell are usually titled in the name of someone else other than the seller and have been signed off and the buyers name left blank so it can be filled in later. If asked who the car belonged to they will say it belonged to a relative who wasn't able to sell it on their own.
These people survive because they do not collect sales tax. The sales tax at a dealership is 8.3% in Phoenix. If you don't have to pay the tax that saves you $830 on a $10,000 car. The worst thing about these private party transactions is that ther is absolutely no recourse if something goes wrong with the car or title. In some cases I have seen, once the transaction is done, you can't get hold of this seller again, if there is a mechanical problem, you are out of luck.
A dealer stands behind the product he sells and will help if these problems occur. Right now Arizona has a huge sales tax shortfall. It has been estimated that the dollar amount of private party sales of automobiles is about the same as the dollar volume of new car sales every year.
If the "curbstoners" are put out of business, mor people will patronize legitimate car dealerships. These people would then have the security of knowing exactly who sold them the car and where to go if a problem does occur. Most people keep a car 2, 3 or more years so the tax isn't that great a burden.
There are many arguments about exemptions and ways to collect the tax. Many states use this method and I fullly support enacting this sales tax.
