PROVIDENCE – House Speaker Nicholas A. Mattiello introduced legislation Tuesday that would end the Rhode Island excise tax on automobiles by fiscal 2024. The proposed bill would drop the tax rate 5 percentage points each year starting in fiscal 2018 until fiscal 2023, after which it no longer will be collected.
The minimum value exempted from being taxed would be increased to $1,000 starting in 2018 from the current $500, and increase another $1,000 each successive year until it reaches $6,000 in 2023 (individual cities have been allowed to set the exemption level but this will override that flexibility).
“I am pleased to be able to move forward with the plan to phase out the highest car tax in the country” said Mattiello in a statement. “I have been hearing complaints about the car tax for the 11 years that I have been a representative, and our citizens know this is an unfair, regressive and oppressive tax. I am committed to serving the people and their agenda and ensuring that our taxpayers are treated fairly, as they deserve.”
The bill also would immediately lower the “age out” limit of a car from 25 years old to 15 years old. A car past that age is automatically valued at $500. The speaker’s press release said this would drop an estimated 150,000 cars from the tax rolls in the first year.
As current car tax revenue benefits municipalities, the proposed bill also would reimburse municipalities that lose money from the car tax from the state. The first year of reimbursement will cost an estimated $26 million, while in 2024, the loss of revenue is expected to cost a net $221 million. Post phase out, municipalities will receive a fixed portion of the existing 7 percent state sales tax as revenue compensation.
The 2018 state budget is expected to come to a vote in the coming weeks. Mattiello and Gov. Gina M. Raimondo have had a public disagreement over the speed and extent to which the car tax should be modified. The governor has placed her Rhode Island Promise college scholarship program as a higher priority for this year and future budgets.
Chris Bergenheim is the PBN web editor.
