Car tax remains law of the land, for now
Legislation to eliminate the car tax did not pass the General Assembly in this session, but the fight over what some call "the most regressive and hated" tax in the state is not over.
"We'll continue to respond to that issue and work on the issue over the summer and into next year," said Speaker of the House J. Brendan Sharkey, D-Hamden, who championed the legislation.
"I think everyone agrees that the motor vehicle property tax is inequitable," said Jim Finley, executive director of the Connecticut Conference of Municipalities.
"However, our entire property-tax system in Connecticut is inequitable," he said. "If you eliminate it without making up the revenue, you're putting the full concentration of a regressive property tax on businesses and homeowners."
Finley said that after the House voted to approve the measure, there were flurries of phone calls from town and city officials throughout the state to their senators, who ended up shelving the measure.
More InformationDifferent towns, bills
A glance at the wildly varying tax rates imposed on cars in different municipalities shows why the tax draws such ire.
The owner of an older Mercedes worth $50,000 would pay $1,439 a year in Bridgeport; $928 in Stamford, $917 in Norwalk, $786 in Danbury and $364 in Greenwich. The owner of a $20,000 Honda would be charged $576 a year in Bridgeport, $371 in Stamford, $367 in Norwalk, $314 in Danbury and $145 in Greenwich.
The local leaders' reaction should not have been a surprise.
The car tax generates $700 million a year in revenue statewide for municipalities. In Danbury, car taxes generate $10 million a year in local revenue, while Bridgeport collects $27 million with the tax.
"It wasn't a fully thought-out proposal and there's a reason why people over the last 25 years have not come up with a solution for the motor vehicle tax: There's a lot of municipal revenue at stake," said Finley, a member of a subcommittee of Sharkey's commission on the matter.
New license plate fees, a hotel tax and taxes on rental cars could have replaced some of the lost car tax revenue if the measure had passed.
"We've always said that making towns whole was also not necessarily something that was going to continue indefinitely," Sharkey said.
Towns and cities would have to raise revenue in other ways, such as local-option tax programs or designating more special taxing districts within cities.
"The idea ultimately is to wean towns from this revenue source over an extended period of time, so that they have the time through efficiencies and through other options, which might include local-option taxes or other things like that, to help mitigate whatever impact there might be, but we're talking five, six, seven years down the road or longer, so we'll have plenty of time to revisit how we go about mitigating that loss of revenue," Sharkey said.
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