State legislature considers adding new car taxes

From the neon orange parking tickets often affixed to car windshields in Boston to the brutal winter weather that often does a number on even the most durable vehicles, Massachusetts car owners face a number of difficulties along with an annual automobile excise tax.

This tax, however, may be changing in the near future, leading to increases for those who own or lease newer cars and an elimination of the tax for those who own cars more than five years old.

A proposal before the state legislature calls for ‘a change in the motor vehicle excise collection schedule,’ according to Geoffrey Beckwith, executive director of the Massachusetts Municipal Association.

‘The new schedule would reflect the car’s value more appropriately using its Kelley Blue Book pricing,’ Beckwith said.

The existing rate is based on the state’s assessment of the car and not on its market value, as it would be in the new bill. As a rule, the state currently maintains that a car’s value drops each year. In the manufacturing year, the state considers its value to be 90 percent of its manufacturer’s list price. That value plummets to 60 percent in the second year, 40 percent in the third year, 25 percent in the fourth year and 10 percent every year after.

Rather than a direct increase, the schedule change is designed so that cars would keep their value longer and taxpayers will pay more overall, Beckwith said. However, cars that lose their value quickly will have a lower fee.

In addition, lawmakers recommend that no tax be collected for vehicles more than five years old. Since current excise taxes on older vehicles are so low, the cost of collecting those fees often exceeds the tax itself, State Representative Stephan Kulik told The Boston Globe.

The necessity of this increase is due to ‘the state cutoff major sources of local aid, through budget cuts, that are supposed to help communities maintain roads,’ Beckwith said. ‘With the roads crumbling after a brutal winter, a modest adjustment to the excise tax would help to pay for the upkeep of the roads.

‘It is cost-effective to do this right now, rather than waiting several years because road repairs will be much more expensive.’

Nonetheless, many Massachusetts residents are outraged by the new plan as well as by the existence of an auto excise tax in the first place.

‘This is a very unpopular tax,’ said Barbara Anderson, executive director of Citizens for Limited Taxation. ‘Massachusetts is trying something very sneaky by changing the formula to determine how much a car is taxed when it’s a tax that most states don’t have and one that already annoys residents because they have to pay it in cash every year.’

In agreement with many residents, Gov. Mitt Romney is not in favor of the bill. He plans to veto it if it reaches his desk, according to Nicole St. Peter, a Romney spokesperson.

Even so, Beckwith insists that this bill is a necessity, adding that ‘[the excise tax] could be less controversial than having the roads fall apart and communities fall into fiscal chaos.’

The bill is still only a possibility, he said, but even if it does pass, ‘[lawmakers] would never increase it so much as to solve the crisis but enough that would be helpful as being part of the solution.’