It’s Back, the Car Tax Phase out Promise

Its Back, the Car Tax Phase Out Promise
In May 2015 I wrote an opinion piece for Golocalprov about the car tax. I titled it “Time to tell the car tax to hit the road”.

It’s Deja Vu all over again regarding this issue. The infamous unfair car tax tax is the most hated tax in Rhode Island. It’s the political football every election season. You know, the one everyone kicks around every election year but fails to score a touchdown with. Oh it’s discussed by many and promised by many to be eliminated or revised in some way, but like an injured quarterback , it’s put on the bench.

At a press conference today, House Speaker Matiello promised to change the car tax. This caused me to reminisce about the history of the car tax phase out program.

In 1997, I chaired a House Legislative commission to study ways to eliminate the car tax and inventory tax in Rhode Island. This derived out of a bill I introduced in 1996 to lower the car taxes in Rhode Island. As a result of this commission, the General Assembly passed the Fiscal year 1999 State Budget (P.L. 1998, Chapter 31) which included an article beginning the process to eliminate all vehicle property taxes by 2005. The first checks, totaling $5,849,127.94, were mailed to all the state’s municipalities and fire districts as the state’s first advance tax reimbursements n November of 1998. The General Assembly repealed the motor vehicle tax by increasing exemptions, beginning with. $1500 exemption in Fiscal year 2000, and then raising exemptions each year and also by freezing rates at the FY 1998 levels. General state revenues were to be used to reimburse cities and towns for loss revenue, eventually including the then 0.6 cents of the sales tax which was used to pay the DEPCO debt.

This was a good plan to eliminate the most regressive tax in the State. It made no sense that vehicles in the town of New Shoreham were assessed at $9.20 per thousand, while Providence motor vehicles were assessed at $76.78 per thousand dollars.

I was happy to co-sponsor the Motor Vehicle Excise tax elimination phase out program which was introduced by then Finance Chair Antonio Pires in 1998. I was also happy to be appointed the Chairperson of the Permanent oversight commission to oversee the implementation of the program. We were all excited to be getting rid of an unfair tax and being able to help everyone that owns a motor vehicle.

Unfortunately that excitement was short lived. After two years of its implementation, the car tax elimination program was frozen under the Lincoln Almond administration based on the argument
that state revenues could no longer afford the reimbursements to cities and towns and that the reimbursements were hurting other programs. I remember voting “no” on freezing the program because I believed then and still do now that the General Assembly made a commitment to the people of Rhode Island to end the car tax.

In 2005, I filed House Bill H5077 to reinstate the phase out of the motor vehicle excise tax program by 2008. The exemptions people were to be taxed on would be increased yearly causing the amount of taxation on cars to decrease eventually phasing out the car tax. State revenues were to be coming from the Twin River expansion.

In June of 2006, the House of Representatives, passed a bill I submitted to accelerate the dormant car tax phase out plan be exempting the first $6,000 of a car’s value in fiscal year 2007. This was good news, because we were finally back on the field again and ready to have a winning touchdown for the people of Rhode Island.

Again, that good news ended a few years later when the General Assembly passed an article to end the car tax phase out plan submitted by then Governor Donald Carcieri because of tough economic times in 2010. I cringed when this happened because I knew it was the end of a fifteen year process that should have resulted with a complete phase out of the car tax.

To make matters worse, the General Assembly then dropped the exemption of car values for local tax purposes from $6,000 to $500.00 in 2011 leaving taxpayers stunned with car tax bills higher than they had paid in previous years. Since then, the focus has been put on the Rhode Island Vehicle Value Commission and the way it values motor vehicles. The problem for municipalities is that they feel if the vehicle values are lowered, the cities and towns may receive
less revenue from taxes collected and therefore have budget shortages. Per state law, the vehicle value commission uses the clean retail value of the make and year of a vehicle for tax purposes and there is no appeal process for the vehicle owner.

There is no fair way to lower the car taxes in our state because every municipality pays a different amount on their assessed vehicles. The only fair way is to eliminate the car tax completely is with a car tax phase out program. The legislation to eliminate the car tax in 1998 was the only fair way to do this.

This still can be done by reinstating the car tax phase out in this budget program. Yes, the figures might change but the legislation passed and the fundamental law is still there from 1998. Tell your legislator and local elected officials to reinstate the car tax phase out program, not because it’s election year but because it’s a fulfillment of a promise made in 1998 to the people of Rhode Island.

It’s time for all Rhode Islanders to speak up and it’s time for our Rhode Island elected officials to kick this political football into the end zone.

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