The Legislative Press & Information Bureau
|Seeking a fair way to set auto values
By Rep. Joseph M. McNamara
|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 pre-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
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
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
pre-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)