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House Speaker Calls for Eliminating Car Tax -- Again

House Speaker Calls for Eliminating Car Tax -- Again

Hartford Courant, Thursday, February 15, 2018

By Christopher Keating

House Speaker Joe Aresimowicz called Wednesday for eliminating the state’s car tax — a long-running, controversial issue that has remained unresolved for decades.

Aresimowicz told mayors and first selectmen that it’s a nuisance tax that does not raise much money and takes extra efforts to collect relatively small amounts. Several governors have tried to eliminate the tax, but they eventually backed off the idea because it is complicated and could lead to towns losing money from the current property taxes that they collect on cars.

“Just roll it into the mill rate,’’ Aresimowicz said. “It makes total sense.’’

Despite multiple efforts for repeal in the past, some municipalities have complained about potentially losing money if the lost revenue was not reimbursed by the state. The most recent effort came last year when negotiators reached a bipartisan deal on repeal, but the plan was dropped after questions were raised about exactly how it would work and whether the towns would lose any money.

The idea has an uncertain future this year due to opposition from the Council of Small Towns — the group that Aresimowicz and other top legislators addressed Wednesday during a forum about legislative issues at the Aqua Turf Club in Southington.

“COST opposes the elimination of the car tax,’’ said Betsy Gara, the group’s executive director. “The car tax is an important source of revenue for small towns. Towns don’t have any way of making up the lost revenue. Eliminating the car tax will simply shift a greater burden onto already overburdened homeowners and businesses.’’

But Aresimowicz said the time has come to finally do away with the tax that has brought complaints from drivers for years.

“At one point in time, being the Land of Steady Habits was our greatest strength,’’ Aresimowicz told reporters after his remarks to local leaders. “At this point, it’s become our greatest weakness. And I’m tired of hearing, ‘But that’s not how we do it.’ ‘’

Different rates in different towns back to top

Some cities that have difficulty with car taxes — with residents moving to other towns or selling their cars — only collect about 92 percent of the total, while others collect about 97 percent, he said. In addition, car owners in different towns pay widely different rates on the same style of car, depending on the mill rate in each town.

“It’s totally unfair. It’s an antiquated system,’’ Aresimowicz said. “It makes no sense. It’s been around forever. There’s a lot of things that have been around forever. That doesn’t mean it’s good.’’

Under the state budget, towns with mill rates of 45 or higher would get relief on car taxes in the second year of the two-year budget. Currently, all towns with mill rates over 39 are getting the relief. As such, drivers in some towns would no longer get tax breaks, starting in July.

“There’s a ticking time bomb in the budget that we passed that is going to force us to deal with the car tax at some point,’’ Aresimowicz said.

House Republican leader Themis Klarides of Derby said eliminating the tax is a good idea only if taxes are actually cut, rather than rolling them into the overall total and letting taxpayers pay the entire amount on their homes. She agreed that the same car can have widely differing tax rates in New Haven and Woodbridge, which are next to each other.

“It’s funny coming from the Democrats who have given us every tax known to man in history,’’ Klarides said. “If I’m paying the same amount of dollars in additional property tax, that’s not lowering anybody’s taxes. … We have to see if it’s actually going to lower people’s tax liability.’’

Aresimowicz initially made his comment near the end of an hourlong discussion of state issues at a forum in front of the mayors and first selectmen of small towns. He then provided details.

‘’Elimination of the car tax needs to be part of a holistic tax reform initiative in Connecticut and not be dealt with in an isolated way,’’ said Kevin Maloney, a spokesman for the Connecticut Conference of Municipalities. “CCM has presented proposals for reforming the way local services are funded, but to date, these proposals have not been enacted by the General Assembly. Last session, when the car tax was proposed for elimination, CCM agreed to work with General Assembly leaders to devise a solution – however, those meetings have yet to take place.’’

Republican Gov. M. Jodi Rell proposed a complete elimination in 2006 and 2007, while Gov. Dannel P. Malloy proposed a partial elimination in 2013 that would apply only to cars with a market value of less than $28,500. As a result, high-end cars like Rolls-Royces, Bentleys and Ferraris would still have been taxed. But neither plan was adopted.

When Malloy proposed his idea, state budget director Ben Barnes said he was paying $400 per year on his Volkswagen Jetta in Stratford, but the same car would cost $1,400 in car taxes in Hartford.

More than 20 years ago, then-Gov. Lowell P. Weicker Jr. called for phasing out personal property taxes over 10 years. After Weicker's plan failed, then-state Sen. James Maloney of Danbury successfully pushed a proposal that was designed to eliminate the car tax in future years. But before that plan took effect, Weicker's successor, Republican John G. Rowland, persuaded the legislature to repeal the law.