Car tax proposal would leave towns in hole
Gov. Dannel Malloy’s proposed budget has many local officials concerned about the future of their towns — particular the plan to eliminate some car taxes.
“We collect $6.3 million in taxes on cars,” Naugatuck Tax Collector Jim Goggin said. “That’s 10 percent of our budget.”
Malloy is proposing to exempt the first $20,000 of a vehicle’s assessed value from the property tax. People owning vehicles with a market value of less than $28,571 would pay no taxes all.
Goggin was not sure how many vehicles in Naugatuck fell under Malloy’s proposed elimination, but he felt that it would include most of them.
However, Goggin said residents whose vehicle would be included under the proposal should not feel like they are getting a tax break.
“People shouldn’t get excited, it’s just another shell game,” Goggin said. “The bottom line is we have to collect taxes. We have to collect $66 million in taxes regardless of whether it’s car, house, or personal property taxes. The impact on homeowners will be the same.”
According to Malloy’s budget, the proposed eliminations will be optional for municipalities as of July 1. However, if put into effect, the eliminations will be mandatory as of July 1, 2014.
Diane Lauber, tax collector for Prospect, was concerned with how the elimination of these car taxes would impact the town.
“I think it would be more of a burden on the town. It will put more of the burden of paying the taxes on the residents who own property. They will have to make up the difference,” Lauber said.
When presenting his proposal, Malloy said that it would help ease the burden of tax offices trying to collect the taxes. However, Lauber does not believe that is a problem for a small town like Prospect.
Lauber said that, while larger municipalities might have problems collecting taxes with people moving in and out of the cities, Prospect has a collection rate in the high 90 percentile.
“It seems like the government will move the burden of paying taxes from the state level to local level and that’s not helpful to any municipality,” Lauber said.
Prospect Mayor Robert Chatfield felt that, since this was still a proposal, it was too early to speculate on the impact it would have on the town. However, he did note that simply cutting car tax would not cut taxes for residents.
“The tax money to keep the services we have now has to come from somewhere,” Chatfield said.
The assessed vale of motor vehicles in Prospect on the October 2012 grand list is $74.8 million. Using the current mill rate of 27.58 mills, car taxes would bring in roughly $2 million in revenue for the town.
Motor vehicles in Beacon Falls were assessed at $40,640,550 on the October 2011 grand list, the latest list available. Using the current mill rate of 31.1, car taxes would bring in about $1.3 million in revenue.
Beacon Falls Tax Collector Ursula Henry could not be reached for comment.
Beacon Falls First Selectman Gerard Smith said the proposal would negatively impact the town and all its taxpayers. He said he has not heard any proposal from the Governor to make up the lost revenue and the town would have no other means to make it up other than by increasing taxes on homeowners and businesses.
“It’s got to be made up somewhere and it’s going to be put on the backs of the taxpayers of Beacon Falls,” Smith said.
Naugatuck Mayor Robert Mezzo echoed Smith’s sentiments.
“If that plan was adopted you would have a higher mill rate to make up for car tax,” Mezzo said.
While Mezzo was not in favor of the Governor’s plan to simply eliminate the car tax, he feels that Malloy has done the state a service by bringing property taxes up for debate.
“I applaud the Governor for putting the idea forward to debate,” Mezzo said. “Our property tax system in Connecticut is a disaster. It’s the most onerous tax we pay.”
Mezzo said since there are varied mill rates across all the municipalities in the state, the taxes are often difficult to collect.
“While [the proposal] doesn’t reform it, it does take a look at a tax structure you would be hard pressed to argue is equitable across 169 municipalities,” Mezzo said.