State lawmakers again mull repeal of motor vehicle tax

For more than a decade, state officials have flirted with removing the property tax on motor vehicles.

Sen. John Fonfara of Hartford and other Democrats have a plan to make the levy go away.

It’s part of a larger plan to redistribute property tax burdens, generally providing more relief to low- and middle-income households and asking more from each community’s wealthiest taxpayers.

The goal, Fonfara said, is to chip away at “this gross inequity, this incredibly regressive burden [placed] on the least able in our communities.”

Fonfara, who co-chairs the Finance, Revenue and Bonding Committee, wants to eliminate the car tax, except on rental vehicles, calling it the worst example of unfair taxation in Connecticut.

As an example, the Hartford lawmaker suggested two hypothetical vehicles, identical in make, model, age and condition — one owned and garaged in New Britain and one in Greenwich.

The New Britain vehicle would be taxed at 45 mills, or $45 for every $1,000 of assessed property, according to the state Office of Policy and Management listing of municipal tax rates. More importantly, Fonfara said, it would be almost four times that of the Greenwich car, taxed at 11.59 mills.

Sen. Will Haskell, D-Westport, another leading proponent of the bill, said the levy is a nuisance for municipal officials to collect and a deterrent to state efforts to attract young professionals to live and work in Connecticut.

Bristol Assessor Thomas DeNoto, president of the Connecticut Association of Assessing Officers, said his organization has taken no position on the bill.

DeNoto said managing vehicle-related taxes consumes about 25% of local property tax assessment work, and about 10% of the taxable list of vehicles must be adjusted every year as residents move, sell vehicles or change cars, due to age or collision damage.

Haskell, who at 24 is the youngest member of the General Assembly, said he’s confident repealing the vehicle tax would make Connecticut more attractive.

According to WalletHub, a personal finance website, only 27 states tax motor vehicles. Connecticut’s average burden ranks fourth-highest.

“It is the tax that I hate paying the most, because it comes out of nowhere,” Haskell said, adding that many college graduates are looking to settle in urban centers — where property tax rates in Connecticut are highest. “I think [removing the tax on vehicles is] a huge step toward keeping folks in this state.”

Still, property taxes on vehicles generate more than $900 million per year, according to the Connecticut Conference of Municipalities. Unlike Gov. M. Jodi Rell’s 2007 repeal proposal, Fonfara’s would not offer matching state grants to replace the revenue cities and towns stand to lose.

Both he and Haskell were careful not to describe car tax repeal as a tax cut, but rather a step toward efficiency and greater fairness.

Communities would likely replenish the funds by collecting more property taxes on land, buildings and equipment.

This could be done by increasing mill rates. But the bill also gives municipalities another redistribution option: to change how taxes are calculated.