R.I. car-tax burden uneven

Rhode Island is a perennial on the “worst state” lists that calculate tax burdens, imposing some of the highest property taxes in the nation.

The most recent listing last week, by the online financial-news site WalletHub, ranked the Ocean State last in affordability for the auto-excise tax, and 42nd out of 50 states and Washington, D.C., for real estate taxes.

In its analysis for the car tax, WalletHub looked at only those communities or counties that, combined, make up at least half the state’s population, then extrapolated it to the state level using weighted averages. The car tax was calculated based on the 2014 best-selling car, the 2015 Toyota Camry, valued at $22,970.

This gave Rhode Island an average auto property tax of $1,133.

- Advertisement -

But in Rhode Island, there is no consistent average in auto excise taxes. Each community sets its own vehicle value exemption and tax rate, making the national comparison meaningful in some areas of the state but not others.

“Depending on where you live, you may not pay anything,” said Rep. William O’Brien, D-North Providence.

The state gave communities authority to set their own exemptions in 2010, when it lowered the statewide exemption from $6,000 to $500 per vehicle in the midst of a budget crisis. In the years since, towns and cities have diverged sharply on the tax rates and exemptions.

Providence this fiscal year has the highest tax rate, at $60 for each $1,000 of value, and it exempts only $1,000 of a vehicle’s value, according to the R.I. Division of Municipal Finance. A car worth $5,000, then, will generate a $240 excise tax bill.

Following closely behind is Pawtucket, which charges $53.30 for each $1,000 of car value, and exempts $500 in value. For the $5,000 car, this produces a bill of $239.85.

Woonsocket rounds out the top three for most expensive, with an excise tax rate of $46.58 per $1,000 and a $500 exemption.

By comparison, the highest vehicle exemptions are found in some of Rhode Island’s most affluent communities, including Jamestown, Narragansett, Newport, Scituate, Little Compton and Tiverton, all of which exempt the first $6,000 in vehicle value, according to state figures. Many of these communities also have a low auto tax rate. Tiverton and Narragansett both charge less than $20 per $1,000, for example.

WalletHub spokeswoman Jill Gonzalez defended the methodology of the national ranking, saying the review was consistent across states that did not have a uniform tax rate.

“We took information that was the most quantifiable,” she said.

For the past four years, the General Assembly has had several bills introduced seeking to restore the $6,000 statewide exemption, but to date has taken no action.

O’Brien said the absence of state support for the higher exemption hurts elderly residents with low incomes the most. North Providence has maintained its $500 exemption since 2010, when the city lost about half of its state municipal aid, O’Brien said. The community is among the top 10 in Rhode Island for the highest auto tax burden, according to the state figures.

“A person who can’t drive loses their freedom,” O’Brien said. •

No posts to display