Eliminating car tax could mean higher sales and hotel taxes, task force hears
On Monday, a new task force heard several suggestions for eliminating it – but many of them may be dead on arrival politically.
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In Connecticut, most people agree that they hate the car tax.
On Monday, a new task force heard several suggestions for eliminating it – but many of them may be dead on arrival politically.
WHAT IS THE CAR TAX?
Some drivers aren't even sure why they pay a car tax.
“I lived in New York, and we never paid a tax,” said Joy Skowronski, of Westport. “So I don't know why we should.”
Cities and towns levy a property tax on cars to pay for everything from roads to schools. Getting rid of it would cost municipalities $1.1 billion per year, according to state budget officials. In some places, property taxes (including homes and businesses) make up 75% of the local budget.
HOW TO SCRAP THE TAX
A bipartisan task force is exploring how to eliminate the tax – or at least reform it – without shifting the cost from car owners to homeowners.
“You ask every single person out there, ‘You want to get rid of your car tax?’ ‘Absolutely,’” Randy Collins, with the Connecticut Conference of Municipalities, told the panel. “Are you willing you pay more on your sales tax, for groceries, whatever it may be? ‘Well, I don't want to do that.’”
CCM and the Connecticut Council of Small Towns offered several options to replace the lost revenue – including creating a local sales tax (right now, only the state levies sales tax), higher hotel taxes or new fees on car sales and insurance.
Both groups also recommended eliminating some of Connecticut’s dozens of property tax exemptions, which could be deeply unpopular with groups that claim them.
Connecticut’s tax commissioner said the plan needs to lower taxes overall, perhaps through new revenue streams for towns.
“It has to be used to reduce the overall property tax burden,” said Department of Revenue Services Commissioner Mark Boughton. “Because if you're just shifting money around from a car to a house, what are we doing here?”
Automated speed cameras could also replace some of the lost money. Connecticut lawmakers just approved them earlier this year.
MAKING THE TAX FAIRER
Drivers got some relief last year, when the state capped car tax rates at 32.46 mills. But rates are still wildly unequal.
“A 2020 Honda Accord would be $300 in Greenwich and be $600 in Hartford,” said Windsor Locks First Selectman Paul Harrington. “And that is unfair.”
And that’s if car owners even pay the tax. Many simply evade it, opting to register their cars in other states or in towns with a lower tax rate.
POLITICALLY VIABLE?
State lawmakers know that none of the alternatives are particularly popular with the public.
“They should eliminate it and lower all the taxes,” said John Krondes, of Stamford.
The car tax task force will come out with recommendations before lawmakers head back to Hartford in February.
