PROVIDENCE, R.I. (WPRI) – Rhode Island’s car tax is one of the most despised fees in the state, and now House Speaker Nicholas Mattiello says he’s going to get rid of it.
The Cranston Democrat vowed to eliminate the vehicle excise tax during his contentious re-election campaign in House District 15.
“Everyone complained about the car tax and it seemed there was a period of time that every door I knocked on folks were complaining about the car tax,” Mattiello recalled.
He was re-elected in November and weeks later, in an exclusive interview with Eyewitness News, Mattiello said that he plans to deliver on that promise.
“It’s a five-year plan right now,” he said. “But it’s not one where I tell folks wait ’til the fifth year and you’re going to see this magical relief. Meaningful relief the first year, and in order to have meaningful relief the first year, you’ve got to take $215 million, divide it by five, and we’ve got to be somewhere in that ballpark.”
Rhode Island’s cities and towns collect nearly $215 million in vehicle excise taxes every year, so if state legislators follow Mattiello’s five-year phaseout plan, they’ll have to find about $43 million a year in state revenue to offset the money communities lose as the car tax goes away.
Mattiello says the state’s recent increase in revenue will help.
“Our revenues are on the rise,” he said. “They’re $40 or $50 million ahead of our projections just last year. The first year I was elected our revenues were dropping like a lead ball, hundreds of millions of dollars almost overnight, and now we’re getting that revenue back. So it’s that revenue that we get back that we’re going to dedicate to our taxpayers.”
This isn’t the first time the state has tried to eliminate the car tax. Former state Rep. Joanne Giannini was part of a commission charged with overseeing a 1998 plan to completely phase out the vehicle excise tax.
The state came close, but the recession got in the way, and in 2010, lawmakers reversed their support for phasing out the tax – forcing many cities and towns to bring it back.
But Giannini believes lawmakers owe it to taxpayers to try again.
“It is a commitment that we made to the people; I for one, feel the General Assembly made this commitment to the people of Rhode Island in 1998 and we should fulfill it,” she said. “Municipalities can change the rates at a whim, so we really, as a citizen, have no control over it.”
According to a recent WalletHub survey, Rhode Island has the highest average car tax in the United States. Connecticut, Maine, Massachusetts aren’t far behind – they all make it on the country’s Top 10.
Vermont, however, is the exception to the New England rule. Its residents pay no car tax at all.
In Rhode Island, each city or town determines its own excise tax rate for vehicles independently, with exemptions ranging from $500 to $6,000, depending on the community.
Vehicle values, however, are set by the state. According to the R.I. Department of Revenue, there are 1,087,672 cars in Rhode Island; the statewide average vehicle value is $9,768.83.
“It’s an important challenge and we’re gonna get it done,” said Mattiello. “I’ve promised and I stay true to my promise. I generally – I always keep my promises.”
Based on the current budget outlook, Mattiello said he believes the first phase of car tax relief could be included in the next state budget next spring, though there are many specifics that still need to be worked out.
Gov. Gina Raimondo has said she’s interested in phasing the car tax out, but hasn’t discussed exactly how she believes the state should do it. Senate President M. Teresa Paiva Weed, however, has expressed concern that the state may reward communities where car taxes are too high and punish those where car taxes are lower if lawmakers simply replace each dollar of car tax lost.