Most drivers in RI to face car tax

PROVIDENCE, R.I. (WPRI) - Thousands of Rhode Islanders who own older vehicles are set to receive car tax bills from their cities and towns for the first time in years, according to a survey released Monday.

Until last month, owners did not have to pay taxes on their vehicles’ first $6,000 in value – the state picked up the tab and paid the municipalities instead. That has been the case since a law was enacted in 1998 to phase out the car tax altogether.

But in June, the General Assembly voted to drop the amount the state covers from $6,000 to $500. That has left cities and towns scrambling to decide whether to balance their budgets without the car tax money or make drivers pick up the tab.

Tax phase-out falters

In 1998, lawmakers voted with great fanfare to get rid of the car tax over the next seven years, but four years later they were already extending the length of time it would take to get rid of it.

Last month, Lt. Gov. Elizabeth H. Roberts blasted lawmakers for bringing back “the most regressive tax in Rhode Island history” by dropping the exemption from $6,000 to $500 – lower than the original exemption of $1,500 in 2000.

“It is shocking that in 2010 Rhode Islanders will again face paying a tax that they can afford even less in this tenuous economic climate,” Roberts said in a statement.

Drivers owing more

Although 10 of Rhode Island’s cities and towns have not made a decision yet, another 20 have decided to make drivers fork over at least some of the tax payment that used to be covered by the state, according to the survey by the state Division of Municipal Finance.

Just nine municipalities opted to keep the full $6,000 exemption, many of them wealthier communities such as East Greenwich, Little Compton and Newport. Others include Tiverton and Warwick.

The total amount of tax depends on two factors: the value of the vehicle, and the local tax rate per $1,000 of value. For example, if a car is worth $4,000 and a town with a $500 exemption has a tax rate of $20 per $1,000, the tax bill would be $70.

To see what your town decided to do, scroll down to the table below.

Panel decides value

For drivers, though, all this raises another question: how much does the state think my car is worth?

That is decided by the Rhode Island Vehicle Value Commission, a committee of five local assessors and two state officials set up by the General Assembly for just that purpose. They use data from the National Automobile Dealers Association.

Under state law, a vehicle’s condition or mileage cannot be taken into account when deciding how much it is worth for tax purposes.

Appeals due quickly

If a taxpayer disagrees with the Vehicle Value Commission’s figure, he has 30 days from the time his tax bill is sent to file an appeal with his local tax assessor. The appeal form is available as a PDF.

The commission will tell the assessor its decision on the appeal within 20 days of receiving it, and the assessor will then inform the taxpayer within 10 more days.

Here is a table of the total value of a vehicle exempted from tax in each town. The lower the exemption, the higher the tax a driver may owe. (Towns listed as “TBD” had not decided their exemption as of last Friday.)