Lawmaker’s bill would eliminate car taxes; advocate says idea is ‘virtually impossible’

PROVIDENCE, R.I. (WPRI) — As the recession fell on Rhode Island, state leaders changed the tax on cars to raise more money. Officials lowered exemption to just $500 – meaning nearly every car owner had to pay up to their city or town.

Not many people like paying a car tax, but local cities and towns have come to rely on the revenue.

Now, State Rep. David Coughlin said he thinks the state can afford to lose the tax and cover the shortfall.

“People are dissatisfied and think it’s unfair,” Coughlin told Eyewitness News on Tuesday.

Coughlin wants to change the tax – proposing a bill in the house that would increase the exemption in fiscal year 2017 to $5,000.

Under his bill, the exemption would rise to $10,000 by 2018 – and in 2019, the tax would be completely eliminated, which would result in millions of dollars in lost revenue to cities and towns.

In Providence alone, the city receives more than $30 million every year from the car tax – about five percent of its budget.

The Department of Revenue said the state, as a whole, collects more than $200 million a year from the tax. Coughlin said he thinks state officials can find that money elsewhere, even though the state’s budget is projected to have large and growing deficits in years to come.

“The preliminaries that I’m seeing say we can cover it,” Coughlin said.

He said he’s confident in his chances to eliminate the car tax, but Rob Cote, a vocal activist against the tax, said he believes it’s only wishful thinking.

“It has no chance whatsoever if the General Assembly hasn’t been able to put forth a bill in four years that would effectively lower the car tax 12 percent,” he said. “Eliminating the car tax is virtually impossible.”

In a statement to Eyewitness News about the proposal, a spokesperson for Governor Gina Raimondo said:

“Car taxes have to be addressed, and we are eager to explore ways to alleviate this burden.

But we believe any changes need to be part of a broader package of municipal reforms, hard work, and tough choices led by city leaders.”

Coughlin’s bill has been sent to the House Finance Committee for review.

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