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Bill would change car tax values

January 4, 2012

PROVIDENCE — When the General Assembly abruptly dropped the exemption of car values for local tax purposes from $6,000 to $500 last year, drivers suddenly hit with tax bills several times higher than they were before started paying attention to the way values are placed on their automobiles, and they didn't like what they saw.
That placed a spotlight on a hitherto obscure arm of state government, the Rhode Island Vehicle Value Commission, and the way it conducts its business. In large part, that spotlight was pointed by a Warwick resident, Robert Cote, who launched a crusade of sorts in his city to change the commission's rules and procedures. Cote claims that the increased values are not only incorrect, but “ethically and morally wrong.”
Now Warwick Rep. Joseph McNamara is incorporating several of Cote's ideas into legislation that would reduce the value now placed on automobiles for excise tax purposes, which just about everyone agrees is far higher than the cars and trucks are actually worth.
During a meeting Wednesday of a legislative working group formed by McNamara, Warwick Sen. William Walaska joked that an old truck owned by his daughter was valued at $4,000 but it isn't worth anywhere near that much, “although it might need $4,000 in repairs.
Per state law, the value commission uses the “clean retail value” of the make and year of a vehicle for tax purposes and there is little or no opportunity for an owner to appeal that figure. “Clean retail value” is one of the highest of several classification of a vehicles worth as set by the National Automobile Dealers' Association (NADA).
But David Quinn, Pawtucket's tax assessor and one of the four current members of the commission, says there are several factors to consider in changing the values.
First, Quinn says, if you lower the value of the vehicles, that would decrease the amount of revenue to cities and towns, which have been forbidden from raising the tax rates on vehicles since 1998, when the state began the first of several efforts to phase out the automobile excise tax by reimbursing municipalities for the revenue lost as the exemption on vehicle value was gradually raised.
For instance, Quinn told The Times, Pawtucket bills about $14 million a year in automobile excise taxes. A drop of 10 percent in vehicle values would strip the city of $1.4 million a year that would have to be made up in cuts and layoffs, or increases in other taxes.
“I'm a tax assessor and I have a responsibility to my community as well as being on the Vehicle Value Commission,” Quinn said.
Cote isn't buying that. He says those revenues are currently based on an unfair and inequitable tax and that municipalities should be made to reduce their spending rather than finding ways to recover revenues from the elimination of an unfair tax.
Quinn also said it would be impractical for the commission to entertain appeals based on the mileage and condition of individual vehicle to determine values because they are a small board of volunteers and there are more than a million vehicles in the state.
There are supposed to be seven members on the commission, but there are currently only four, all of whose terms technically expired years ago, according to the secretary of state's website.
Another problem, Quinn noted, is that there is a “maximum taxable value” on vehicles that was established when the state was phasing out car taxes that reduced the amount the state had to reimburse cities and towns. It sets a percentage of the full value on various years and models of vehicles that can change in unusual ways. As an example, he said a 1995 vehicle could be valued at $10,000 one year, but the city could only tax on 30 percent of that value. The following year, that same 1995 vehicle could be valued at $8,000, but the law allows it to be taxed at 100 percent of the value.
That problem was blurred, Quinn said, when the exemption was $6000, but it is more glaring now. “It wasn't a problem when the phase-out was $6,000, but now that it is $500, all this stuff pops up. That $6,000 phase-out covered a lot of sins.
McNamara said he will likely introduce a bill next week that will use the “average trade-in value” rather than the “clean retail value,” one of the suggestions made by Cote. Cote, who is a member of McNamara's working group, predicted that action alone would eliminate about 90 percent of the conflicts over vehicle values.
McNamara said he will also adopt Cote's recommendation that would allow vehicle owners to appeal their assessed values to their local tax assessor by obtaining an appraisal by a certified automobile dealer. That would allow assessments to be made taking condition and mileage into consideration without overburdening the commission.

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