By Patrick Anderson Journal State House Bureau
PROVIDENCE — Gov. Gina Raimondo and House Speaker Nicholas Mattiello both want to cut Rhode Island’s car tax, but have different ideas about how to do it and how far it should go.
Raimondo wants to reduce car tax bills by at least 30 percent through a change, starting next year, in the way automobiles are valued for tax purposes.
Mattiello has proposed eliminating the $215 million car tax entirely over five years and would begin this year by putting around $40 million in the state budget for the fiscal year starting July 1.
Both promise to have the state refund the money cities and towns would lose by cutting the tax.
After Raimondo’s State of the State speech Tuesday, Mattiello said the governor’s plan does not go far enough to “satisfy the citizens of the state.”
Raimondo has said eliminating the car tax entirely is unaffordable.
What do we know about Mattiello’s plan?
Not too much. Mattiello’s staff is still working on his proposal and, while he has laid out his ultimate goal, he has not committed to a mechanism to achieve it.
The last time the state tried to phase out the car tax, starting in 1998, the approach was to raise the exemption value.
While Raimondo has said it makes more sense to wait until a new tax year, Mattiello said he wants to provide tax savings immediately, even if that means cities have to track down taxpayers with refund checks.
Mattiello said he intends to pay for the car tax cut out of state revenue growth and will not raise taxes or fees.
Expect Mattiello to wait until at least the state’s May revenue estimates come in before releasing more details.
What do we know about Raimondo’s plan?
Taxing cars at 70 percent of their current value, rather than the 100 percent, is expected to cost $58 million a year, Raimondo estimates, or a little over a quarter of the current $215 million levy.
One of the main advantages of cutting the tax through vehicle value, is that all but three communities value vehicles the same way, but cities and towns have wide disparities in tax rates and exemption levels.
Still, some drivers will come out better than others.
Rhode Islanders with larger car tax bills will see a larger cut in pure dollar terms, while smaller bills will drop more as a percentage.
Rhode Islanders whose cars fall beneath their community exemption level because of the value change will get a 100 percent tax cut.
The three communities that don’t use full retail value to set their car taxes are Portsmouth, which uses the same 70 percent of retail value Raimondo is proposing; Richmond, which uses 80 percent and Scituate, which uses 95 percent.
“Under the governor’s proposal, these communities can raise the value up to 100 percent of [full retail] and be reimbursed for 30 percent,” said David Ortiz, spokesman for Raimondo. “Our expectation is that these three communities would pass on the savings to their car taxpayers by raising their exemption or lowering their rate.”
—panderson@ providence-journal.com
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