Proposed law would change car tax rate to trade-in value

The Rhode Island State House in Providence.

PROVIDENCE, R.I. (WPRI) — Some changes could be on the way for how vehicles are taxed in Rhode Island, Eyewitness News has learned.

“A car is a necessity for working Rhode Islanders, and we’re taxing it on a false value,” Rep. Joseph M. McNamara, the Democrat representing District 19 in Warwick and Cranston, said on Thursday.

Your car, if you own one in Rhode Island, is currently being taxed on its “clean retail value,” not trade-in value, Rep. McNamara said. Legislation he’s just introduced in the House would gradually change the tax assessment to trade-in value.

“It really is an unfair tax,” McNamara said. “Most people are not driving around in cars with clean retail value. Almost all of us have cars with trade-in value.”

The bill, H-7231, would change tax assessment on used motor vehicles to 95 percent of clean retail value for the first year after passage, 90 percent the second year, and after that 100 percent of the average trade-in value.

According to State House officials, municipal officials opposed the change when it was introduced in the previous legislative session because they fear losing revenue. The new version of the bill would require the state to pick up the slack.

“I’ve eliminated the problem that the league of cities and towns has continually complained about by phasing it in over three years and reimbursing the cities and towns for the monies they lose as we phase in this new valuation method,” Rep. McNamara said.

Warwick Mayor Scott Avedisian said he would need more information on the proposal in order to give his opinion.

“I don’t know how much that would cost the state and that might be very difficult to accomplish,” he said.

The bill has been referred to the House Finance Committee for consideration.

A spokesperson for House Speaker Nicholas Mattiello told Eyewitness News it is too early to say whether or not the speaker supports the legislation.

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