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Walaska aims to amend auto valuation system

It was only four years ago that residents of many cities and towns became painfully aware – when their auto tax bill arrived – of the real meaning of action at the state level to eliminate the $6,000 statewide excise tax exemption.

With cities and towns able to lower the exemption to as little as $500, owners of vehicles once untaxed began receiving tax bills, while others were being taxed on a vehicle that was suddenly as much as $5,500 more than in the previous year. Further complicating matters, vehicles were being assessed at their “clean retail” value rather than on what they were actually worth, increasing many tax bills.

Four years may have passed, but Sen. William A. Walaska (D-Dist. 30, Warwick) is still trying to ease the extra tax burden on residents in his community and around the state.

“Just because auto owners have gotten used to a higher bill during the past few years does not make things right. With the elimination of the excise tax exemption at the state level, some communities saw an open door to grabbing more money from their residents. Instead of gouging their residents, they should have been looking for ways to make the hike as painless as Walaska has introduced legislation offering one method to ease the tax burden – assess vehicles based on the average trade-in price, rather than clean retail value.

“There are vehicles on the road that, because of their age and condition and mileage, would sell for a lot less than the clean retail value listed in some ‘authoritative’ book somewhere,” said Walaska. “The value of that car, and the tax imposed on it, should be based on what it is really worth, not what some publication thinks it is worth in mint condition.”

The Walaska legislation, 2014-S 2203, would allow for an appeal process on municipal excise tax valuations that permits the auto owner to present to the tax assessor a certified appraisal from a licensed motor vehicle dealer of the actual value of the car. The bill would also allow 45 days for vehicle owners to file an appeal of a tax bill, compared to the 30 provided in current law.

“State residents pay a lot of taxes, and this is just one extra burden that’s been added on over the last few years,” said Walaska. “I think amending the assessment method will ease the expense for many people. I don’t think Rhode Islanders mind paying taxes, if they are fair. My legislation is all about making this tax fair.”

The bill is before the Senate Committee on Finance.

12 comments on this item

While it's completely understandable that people want to pay less tax, rather than more tax, I am not sure why a person with a car worth $5,000 should have to pay half the tax of a person with a car worth $2,500. Both cars use the same roads, and maybe the person with the $2,500 car drives twice as much as the person with the $5,000 car. Neither a $5,000 car nor a $5,000 car is a luxury. I think there should be a flat "per car" tax, and then if we want to add a luxury tax for people who own expensive cars, we can do that. This sort of system would fairly allocate the costs of the road infrastructure, and would save a ton of effort on the very imprecise and manipulable "valuation" process. Another alternative would be a mileage-based system -- the more you use the roads, the more you pay for them, but if you are the "old lady who just drives to church on Sundays" then you pay very little.

wrwkri....this is a property tax, not a road use tax so your argument for a flat tax is not valid. This is not a road use tax but a tax on a vehicles worth. This idiotic tax's sole purpose is to take money from individuals. The government would tax the fillings in your head if they could. Does it make sense to pay a yearly tax on property that you were taxed an outrageous 7% when you purchased it? You are taxed to drive it by paying over 30 cents a gallon in federal and state taxes. Maybe more, I've forgotten. But it is not about driving or road use. It is a property tax. The state could tax you on your jewelry if they wanted.

Precisely. The odd valuation metrics just highlight that the tax has no real connection to anything other than creating another revenue source. My point is that in any tax policy, there are effectively three basic principles: (1) revenue generation, (2) fairness, and (3) behavior modification. On the second point, the car tax is only fair if you believe that a person with a car worth 2x another person's car should pay 2x in tax. I don't think that is fair, but sure, it's subjective. On the third point, the car tax encourages people to drive cheap cars. I am actually OK with that, and that's actually what I do partially in response to the car tax (and the car sales tax). But what I'd rather see is a car tax that makes those who drive more pay more for the roads they drive on (as it stands today, the gas tax and car tax don't come close to paying for all of our road expenses). I'd rather see drivers pay more for road infrastructure than they do now, and take some of that tax burden away from income tax payers and real estate tax payers and sales tax payers. That is happening in other states. But I don't see that happening in RI any time soon.

Also, I am not really arguing to change the overall car tax revenue. If there are 2 million cars in the state and the average car tax is say $500, I am saying let's just charge everyone $500 per car per year and be done with all the discussion of valuation metrics. And if we still want to hit people with expensive cars harder, we can drop the $500 to some lower amount and say that the sales tax on any car over X price should be Y percent more. We'd save a lot of administrative cost, and the system would be far more transparent. And it would still be a "property tax" -- there is no rule saying property tax has to be calculated on the value of the property, even though most property taxes are (when they are not, they are usually called "licenses," but they are still taxes based on what you own (like a dog, or a mooring, or the right to serve liquor, or the right to set lobster traps).

If they really want to make it fair, switch from the NADA value to the kelley blue book value.

The NADA value that's currently used is retail pricing including dealer profits, not real value.

It makes no sense at all that you're taxed based on what a dealer could make off selling your vehicle vs what you'd make by selling it yourself.

A mileage based system also is not fair.

What about people who spend 90% of their mileage driving out of state?

Why should rhode island benefit off of people using and putting wear + tear on other state's roads?

You are all missing the real points of the argument. First off, Walaska is so completely uniformed that it is laughable. He has not attended any of the hearings, he has never been to the Vehicle Value Commission hearings, and he did not produce the bill. He copied the bill word for word from the original reform bill. The writer of this article is also misinformed. Stand by for Walaska to produce his annual flyer that touts that he is leading the charge to reform auto taxes. He is a joke at best.

Next, the commission by law is to be made up of 7 members. There are only 4 presently. They are appointed by the governor on recommendation from the League of Cities and Towns. The League continues to request more time to study the car tax reform bills but never has produced any study. They ask for a "fiscal noter" but never produce one. Both Senate and House finance committees as of this date still dont even understand how the tax is levied. They are completely blind to the facts. Walaska's roll is simply to find some momentum to run for re-election on , like he did last year. Can anyone else find any other bill that he authored?? Answer - NO.

How about ending the car tax and replace the lost revenue by increasing real estate property taxes. With the goal being revenue neutral. Most people wont see much of a difference in their overall tax bill. Certainly an individual driving a $50,000 car and living in a $50,000 house would be a big winner and someone living in a $500,000 house and driving a $500 would lose. Not to mention eliminating the costs of processing the tens of thousands of extra tax payments each quarter. Oh and people might actually buy new cars and drive tax revenues up.

Again, complete lack of logic patientman. How many people that own a $50,000 car live in a $50,000 house? Are there any $50,000 houses. Your next analogy is ridiculous. It snot about replacing the revenue, its about reducing the expenditures. Every department in the city is overstaffed, too many benefits, too many sick days, too many sick buy backs, too much pension debt from ridiculous pension deals, too many people on fake disability claims, too much theft at the DPW, too much waste, too much abuse.

Not enough adequate management, not enough over site on waste, not enough prosecution of taxpayer theft, not enough accountability.

That is the problem, there is plenty of revenue, too much waste.

Yeah because real estate taxes aren't already almost the highest in the nation.

Renters already get a free pass on real estate taxes, landlords can't raise rents too high to cover higher taxes otherwise they aren't competitive.

I agree 100% that there is plenty of revenue in the state and too much waste.

For starters abolish all of the individual city and town departments and make county departments for everything (police, fire, schools)

There are counties in other states that have county based systems that are larger than all of rhode island.

You could also privatize some services with non-union employees and see huge cost savings.

Herb and Fenceman, baby steps. The $50,000 house $50,000 car was an obvious RARE or non existent scenario I used to show who would be a winner. Renters pay property tax in their rent. The landlords will be able to raise rents because everybody else will have to raise them. Unlike most Rhode Islanders I have lived a lot of places and never had a tax as dumb and anti growth as the car tax. Don't let perfect be the enemy of progress. Separate the issues. Don't try to merge tax reform with regionalization and cost cutting at city hall. Change takes time. Doing the changes you want are never going to happen. First consolidate the taxes. Then regionalize, then cut spending. Reread what you wrote, and let me know who's ideas have even a slim chance of becoming a reality in RI. Fenceman you've been working on this a long time. What have you accomplished, JACK.

If you consider 1.5 million dollars given back to the auto owners in Warwick as JACK, then JACK it is.

I agree I have a 2012 toyota corolla and they want me to pay one thousand and two hundred dollars I mean if I know Warwick was gonna rape me I would of never financed this car I'm barely affording the full coverage insurgence installments and car payment and what it's my fault I bought it how the hell am I supposed to get to work. I just can't keep going on like this enough is enough this state and city sucks! Excuse my lang. But @&*%&# Warwick and this state they can

shove there property taxes dmv taxes sewer taxes water up ther ass and what ever else I am I forgetting I never seen it this bad before!

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