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Car Tax Bills Jump Along With New State Cap

Car Tax Bills Jump Along With New State Cap

City residents, who in recent days received their motor vehicle tax bills based on 2017 assessed values, noticed an increase from 37 mills to 43.17 mills.  

Taxes on a car assessed at $9,000 are about $388; the same car last year would have cost $18 less in taxes if it was valued at $10,000 in 2016.

This year's higher car tax rate stems from the state budget's increase to the statewide motor vehicle tax cap to 45 mills or a city's real estate and personal property tax, whichever is lower, according to New London's tax collector and the state Office of Policy and Management.

Last year, the statewide cap was 39 mills.

Without a finalized 2018-19 tax rate amid calls for reductions and a city-wide referendum, the city billed car owners according to the 2017-18 real estate and personal property tax rate of 43.17 mills, Tax Collector Maureen Farrell said Tuesday.

Farrell said bills are due July 1 and can be paid by Aug. 1 before incurring interest penalties.

If a referendum fails, the 2018-19 tax rate would increase to the council-approved 43.74 mills, "and we would have to revise the bills to that rate" for the supplemental motor vehicle tax bill due Jan. 1, 2019, Farrell said.

If the referendum passes and the council revisits the budget, it could change the rate to something less than 43.74 mills "but it still could be set higher than 43.17, which again would require us to rebill for the difference," Farrell added. 

OPM assurances back to top

Chris McClure, spokesman for the OPM, said the state's 45 mill-cap on motor vehicle taxes should remain unchanged in future years. But the legislature can change that, he noted.

Farrell said next year's motor vehicle tax bills will not be determined until the city's 2019-20 budget is set in May of 2019.

Farrell said with New London having a transient population, the city has never collected 100 percent of car taxes due for each of the last 25-plus years. As of May 31, the city has collected about 86 percent of the taxes that were due last July, she said.

Mayor Michael Passero said the city receives almost $4 million annually in revenue from the motor vehicle tax. He and Farrell said the state would have to reimburse towns significantly if it eliminated the car tax, an idea that's been debated for many years.

The increase in the statewide tax cap also impacted Norwich, where car owners outside the City Consolidated District pay the same tax rate as real estate owners, 41.46 mills, up from last year's 39-mill cap.

Vehicle owners living in the CCD, where the tax rate is 48.39 mills, pay the state cap of 45 mills, according to Comptroller Josh Pothier.

Kevin Maloney, a spokesman for the Connecticut Conference of Municipalities, said CCM recognizes an inherent unfairness in the car tax, whereby "a Camry in New London gets taxed at a different level than in Waterford."

Maloney said CCM hopes to talk with lawmakers to work on comprehensive tax reform, potentially including eliminating the car tax but only if towns are reimbursed "as it's such a critical revenue source."