RI communities are preparing for car tax changes but there are two plans on the table, either way there should be a substantial decrease in taxes.
With dueling proposals to reform Rhode Island’s flawed car tax system in the State House, cities and towns aren’t sure what to expect.
But at least one community is holding off sending out car tax bills.
“One thing we didn’t want to get tied up in is issuing a bill and then having to issue a credit,” said Pawtucket Mayor Don Grebien. “So from that perspective, to make it easier on the residents, we said we’ll hold off.”
Grebien said the assessor’s office would delay mailing out bills for auto excise taxes until the 2018 budget was passed in the State House. Residents won’t be charged late fees or interest in the meantime, the mayor said.
Under a reform proposal from House Speaker Nick Mattiello, the car tax would be phased out over six years. People with cars 15 years old or older would immediately see their vehicles dropped from the tax rolls for the fiscal year that begins July 1, and the statewide exemption for all cars would be raised to $1,000. Those two steps would be a win for lower-income people with older cars.
“I think it’s fantastic that Pawtucket residents are going to get some relief,” said David Norton of the Pawtucket Parents Alliance. Norton led several protests against the car tax at Pawtucket City Hall and organized neighbors to sign a petition demanding relief for low-income residents.
“They literally don’t have the money to pay it. These are low income residents,” said Norton, who also noted that unpaid car taxes often lead to a downward spiral when car owners can’t register their vehicles due to the unpaid tax bills.
“They can’t renew their registration. So what they do is, they ride dirty,” Norton said. “I’ve had a number of Pawtucket and Providence residents tell me that they have to ride dirty, without a car registration.”
A competing proposal from Gov. Gina Raimondo would tax all cars based on trade-in value, rather than the clean retail value that’s currently used. That step would cut bills by about 30 percent, but wouldn’t address the different tax rates and exemptions used in different towns.
Grebien, who is also the president of the League of Cities and Towns, said communities are hesitant to believe that the state will reimburse each community for the millions of dollars that would be lost once car tax revenue is gone.
An earlier car tax phase out was put on hold when aid to cities and towns was cut following the Great Recession, and the car tax stayed put. This time, Pawtucket is taking a wait and see approach.
“Because of what happened last time, we as municipalities get nervous, and so do the residents,” Grebien said.