PROVIDENCE, R.I. (WPRI) — The car tax debate in Rhode Island is back in the spotlight after Providence Mayor Jorge Elorza proposed lowering the rate in his city.
Elorza presented his $716.8 million tax-and-spending plan for the fiscal year that begins July 1 at City Hall Wednesday night. It calls for the car tax exemption to be increased to $2,000, which would result in about 6,500 low-value vehicles coming off the tax roll.
Providence drivers currently pay the highest car tax in the state.
“This is a first step in addressing the unfair car tax burden,” the mayor said.
It’s not just the city of Providence that’s looking to make a change, however. There’s currently two bills in the state legislature that would completely revamp the car tax.
State Sen. Frank Ciccone, D-Providence, has proposed legislation that would take car tax power away from cities and towns and give it to the state, meaning every car owner in Rhode Island would pay the same rate.
‘People are very dissatisfied and think it’s unfair,” said Rep. David Coughlin, D-Pawtucket.
Coughlin introduced a bill last week that aims to eliminate the car tax by 2019. The state would then repay cities and towns for the lost revenue.
The idea may sound appealing to car owners, but the Department of Revenue said it would cost the state more than $200 million per year.
Despite increasing the car tax exemption and slightly lowering the rate on property taxes, the city of Providence expects to collect more on taxes in the upcoming fiscal year thanks to a spike in property values.