PROVIDENCE – The car tax is going away, but not as quickly as planned, under the fiscal 2021 budget proposal introduced by Gov. Gina M. Raimondo.
A longer phase-out sought by the governor would require the General Assembly to change current law, which has it ending by fiscal 2024, beginning July 1, 2023.
Raimondo is proposing the car tax be chipped at for another five years, ending in fiscal 2029.
Her rationale is the budget is too tight, and the expense of that phase-out too great. She has provided $100.7 million to continue a more modest phase-out in her budget. That represents an increase of $10.5 million compared to last year, but not enough to retire the tax by 2023.
“Recognizing the importance of maintaining a sustainable budget, the governor recommends adjusting the motor vehicle excise tax phase-out schedule,” the budget documents explained.
Because the phase-out is structured as aid to local municipalities – the state is essentially reimbursing the local governments for their costs in cutting the tax – the budget includes a savings for the state through a related $4 million reduction in municipal aid.
House Speaker Nicholas A. Mattiello, who led efforts to kill the car tax, responded on Thursday in a short statement on her budget.
“It’s no secret that I’m interested in maintaining the current law regarding the car tax phase-out. This is the second year in a row that the governor has tried to tinker with the car tax. We must keep our promise we made to our constituents and taxpayers.”
Mary MacDonald is a staff writer for the PBN. Contact her at macdonald@pbn.com.
