by Jennifer Swift
Aug 1, 2013
03:17 AMConnecticut Politics
Pay Connecticut Car Taxes? Our 'Ouch' Map: Hartford's Bill Seven Times Salisbury's for Same Car
You might call Aug. 1 CT-Day, not as in an abbreviation for Connecticut but for car taxes, the colloquial term for the motor vehicle taxes residents pay to the state’s 169 towns and cities. If you didn’t pay by today, then you face a penalty. But that’s not the news flash.
No, the news flash is the same one as every year, though it never fails to shock, anger and dismay Connecticut residents—at least those on the wrong side of the metaphorical tracks. As with the mantra from the real estate world, how much or how little you pay in motor vehicle taxes depends on location, location, location.
That’s right, that Honda Civic, Toyota Camry or Lexus RX 300 in the garage—or whatever the vehicle—can produce a kind and gentle tax bill, or one that leaves skid marks on the checkbook.
In Connecticut, it’s the community you call home—and its fiscal status—that is the overriding variable determining if you’ll have to fork over $100 or $800 in taxes for the exact same vehicle. And, in a sort of double-jeopardy, motor vehicle tax bills tend to be most gentle in Connecticut’s nicer and most affluent communities and toughest in the larger, more challenged places.
Many Connecticut legislators have a love-hate relationship with the tax that provides in excess of $600 million in revenue to municipalities that then don’t need to seek that money elsewhere—such as through an increase in property taxes or through a greater demand on state revenue.
What angers many and fuels calls to change or eliminate the system is the baseline inequity—that where you live decides how much you pay. Motor vehicle taxes are determined by taking 70 percent of the car’s value—also known as the assessed value—and then multiplying that number by the tax rate, which is measured in mills.
For example, if you have a vehicle valued at slightly more than $17,000 and live in Salisbury—the beautiful, rural northwest Connecticut town where actress Meryl Streep has a home—the resulting tax bill would be $123. The tariff for the same 2013 Honda Civic in Hartford is $897.
That translates into a 629 percent premium for the Honda Civic just because circumstances have you living in urban Hartford not bucolic Salisbury.
Why? Because Salisbury’s tax rate is just 10.2 mills but Hartford’s is 74.29 mills. Large cities like Hartford that have a large percentage of property that is not taxable have to make it up by taxing the available property at rates that can be much higher than in other places.
See our interactive map detailing the disparities in motor vehicle tax rates across the state. This map uses a 2013 Honda Civic as an example (valued at over $17,000), and formulated the estimated tax bill in each town.
As a result of how the tax formula works, Hartford, with 124,775 residents, received more than $19 million in revenue from motor vehicle taxes last year. Salisbury, with just 3,977 residents, received just over $325,732 from the tax last year, according to the Connecticut Conference of Municipalities.
Without the tax, the state’s Office of Fiscal Analysis estimates that municipalities around the state would lose more than $632 million.
Gov. Dannel P. Malloy’s proposed budget for the next two fiscal years took aim at the tax, which the governor hoped to scale back drastically. But that didn’t get anywhere, except to frustrate those crafting the budgets in each town, who worried about lost revenue and how it would be replaced.
A spokesperson for the state Office of Policy and Management said Malloy thinks the tax is “unfair” because of the obvious inequity in the system, which is that “owners of identical vehicles, with the same market value, pay very different levels of taxes depending on the town they live in.”
Malloy’s plan, which would have eliminated a tax for vehicles valued at less than $28,500, did not make it through the legislature. One reason was the lack of a plan delineating how municipalities would make up the lost revenue. An alternate plan to phase out the tax over several years and another one to create a single statewide motor vehicle tax rate also failed to gain traction.
“The governor continues to believe that this is an unfair tax and hopes that we can find a way to provide real relief from it, especially for middle class taxpayers,” said Gian-Carl Casa, the Undersecretary for Legislative Affairs at OPM.
Those who bemoaned the elimination of the tax, such as mayors of large cities that benefit the most from the revenue that is raised, won’t argue that the tax is fair or right. But without it, they would be left without a huge revenue stream, forcing them to raise taxes elsewhere.
New Haven Mayor John DeStefano, who was among big-city mayors arguing against the elimination of the tax, told residents at a presentation in February that he didn’t agree with the tax—but it was necessary. Municipalities would have to raise the money somehow, he said.
“I’ve got to tell you, I don’t like paying taxes, but when you say eliminate $600 million in car taxes in the state of Connecticut—the money is still going to come from somewhere,” he said. “So if you’re not taking it out of my right pocket, you’re going to take it out of my left.”
Town leaders around the state echoed those same sentiments.
The Honda Civic that would cost $123 in taxes to own in Salisbury would cost $404 in taxes in Torrington, where Mayor Ryan Bingham spoke up against eliminating the tax.
“If enacted, the proposal could dismantle Connecticut’s critical local-state partnership and in doing so, raise local property taxes, cut municipal services, and cause municipal employee layoffs,” Bingham told the legislature’s Appropriations Committee when the issue was on the table. “No jargon. No spin. These are the facts.”
Bingham is president of the Connecticut Conference of Municipalities (CCM), the statewide association of towns and cities, so his view is one shared by many other municipal leaders.
The town manager of Rocky Hill, Barbara Gilbert, said the elimination of car tax would have a “disastrous impact” on all Connecticut municipalities. “Supporting this bill is tantamount to a tax increase mandate on our municipalities,” she told the Appropriations Committee. “If this bill is implemented, municipalities will be forced to increase real estate and personal property taxes on their residents and businesses.”
But even those who argued against Malloy’s near elimination of the motor vehicle tax hint that the discussion could be revived in the next legislative session in January. So even though motor vehicle tax payments were due by today to avoid a penalty, there’s hope for those hit hardest that a tax universally seen as regressive might be told to hit the road. Even if that happens, whatever change is made likely would not take effect in time to stop the motor vehicle tax bills from coming again one more time next summer.
Meanwhile, Connecticut's overall economic performance is a significant factor in any policy decisions on taxes and revenues, and Forbes.com columnist Jim Powell is asking in a new post, "How Did Rich Connecticut Morph Into One Of America's Worst Performing Economies?"Pay Connecticut Car Taxes? Our 'Ouch' Map: Hartford's Bill Seven Times Salisbury's for Same Car