Seeking a fair way to set auto values
As in so many other Rhode Island families with children who have reached driving age, my daughter – a college senior – is driving a hand-me-down vehicle, a 1999 Plymouth. If I were to sell that particular car on my own, I would feel lucky to get about $300. When I recently received an auto excise tax bill from the city of Warwick, I was shocked to learn that the car had been assessed at $3,000.
My story is not one of its kind. From one end of the state to the other, car owners are getting hit with excise tax bills higher than ever before, and some for the first time, because of the process used to set a value on the cars. Things have gotten out of control and we need to bring some rationality to the process. That is why I have filed legislation to be taken up when the General Assembly returns in January that should resolve the problem and ease the added tax burden being placed on our citizens. The bill will bring fairness, accuracy and truth to the valuation of motor vehicles and the assessment of excise taxes, already considered by many to be one of the most regressive forms of taxation in the state.
As part of last year’s state budget, the state did away with the $6,000 auto excise tax exemption that was uniformly administered by all cities and towns. Under that exemption, anyone owning an auto that was worth less than $6,000 did not have to pay excise tax on the vehicle; those with vehicles valued higher than $6,000 were taxed by their communities on the amount over that threshold.
With elimination of the $6,000 statewide exemption, cities and towns were allowed to lower the exemption to $500. As a result, an individual with a vehicle that was worth, for example, $5,000 last year paid no excise tax, while that same $5,000 vehicle owner may now face an excise tax bill on $4,500 worth of value of the car if the community has dropped the exemption to its lowest point of $500.
It is hard to fault cities and towns for doing this, since they are all facing their own financial problems. But hiking taxes on anything when so many people are struggling to make ends meet is just not right. Setting inflated and unrealistic values on old autos is also just not right.
Recently, the state’s Vehicle Value Commission acknowledged that the value the state assigns to cars for tax purposes may be too high and said commissioners hope to meet with legislative leaders to develop a new valuation method. The state currently uses the “clean retail value” of a car, the highest value from the National Automobile Dealer’s Association bluebook. But that assessment is artificially inflated and does not take into account the specific condition of an individual’s vehicle.
Under my legislation, an assessment would be more personalized and in line with the true value of what an individual would receive if that vehicle was sold. The legislation would create a meaningful appeal process, giving a taxpayer a chance to appear before the Vehicle Value Commission to present evidence why the assessed value on a particular vehicle may be too high. The legislation would further ensure that a declining percent value is given to all vehicles based on the age of the vehicle or would allow for a set nominal amount to be assessed on older cars.
Since the $6,000 exemption was eliminated, most communities around the state have lowered their minimum exemptions, many to the lowest threshold of $500 (including my own community of Warwick). Bills sent out by communities using the new valuations have led to taxpayer complaints and protests and nearly 4,000 appeals filed since 2010.
I think it is fair to say that we cannot afford to return to the $6,000 exemption, but it is also a fact that the current process is causing real financial difficulties for lots of car owners around the state. We need to work toward an equitable solution and I believe the bill I have filed will accomplish that.
Rep. Joseph M. McNamara is the Democratic Representative from District 19, Warwick, Cranston, and Chairman of the House Committee on Health, Education and Welfare.