Mattiello introduces plan to cut unpopular car taxes

By MATT O'BRIENMarketsAssociated Press

A plan to eliminate Rhode Island's unpopular car taxes over the next six years was introduced Tuesday in the state House of Representatives.

House Speaker Nicholas Mattiello announced the new legislation to phase out what he called a "regressive, oppressive tax which all Rhode Islanders dislike."

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Mattiello said it will cost the state about $221 million to fully eliminate the taxes by 2023.

The vehicle excise taxes are levied by cities and towns, so his plan to cut them involves reimbursing municipal governments, each of which has used a different formula to collect the tax. The highest taxes are in the state's biggest city, Providence, where car owners each year pay $60 for each $1,000 of a vehicle's assessed value.

Mattiello said the first $26 million cut would take effect immediately by reducing the percent of a car's retail value that can be taxed from 100 to 95 percent in the fiscal year that begins in July. It would drop another 5 percent each year until 2023, when the taxes would be fully repealed.

On July 1, it also would exempt any car that is more than 15 years old from being taxed, which could immediately remove about 150,000 vehicles from the tax rolls. A current tax exemption exists for cars older than 25 years old.

Mattiello, a Cranston Democrat, pledged during a hard-fought re-election campaign against a Republican challenger last year to eliminate car taxes. Democratic Gov. Gina Raimondo proposed a more modest cut in January.

They have since sparred over the cost of the proposed cuts, which will be difficult to pay for in a year when state leaders are already struggling to patch budget shortfalls caused by lower-than-expected state revenues and higher-than-expected spending. In a statement Tuesday, Raimondo credited Mattiello for trying to tackle the issue and said "his $220 million plan deserves a full public vetting."

Mattiello told reporters Tuesday that the state can afford to phase out the taxes, but didn't detail specifics of where the money would come from. He said the high taxes make the state an outlier in the United States. Only half the states have car taxes at all, and Rhode Island's car taxes are among the highest in the country — especially in cities such as Providence.

The first public hearing is tentatively scheduled for next week in the House Finance Committee. The proposal must all also be considered in the state Senate before lawmakers approve a budget due by the end of June.