Governor needs to rethink car tax rollback
Immediate elimination of motor vehicle levy would be costly to municipalities
Published 3:51 pm, Wednesday, February 20, 2013
We are not fans of the Connecticut motor vehicle tax, a regressive levy that proportionately hits lower-income individuals the hardest and that sports built-in inequities on taxes paid on vehicles from one town to the next.
Having said that, we nonetheless oppose Gov. Dannel P. Malloy's proposal, made Feb. 6 in unveiling his biennial budget to the state legislature, to eliminate the motor vehicle tax on cars and trucks valued at less than $28,000.
In today's difficult economy, there are many Connecticut residents who would love to save $50 or $100 or a few hundred dollars. And we would love to see them keep that cash.
But here's the problem: Municipalities count on the revenue from car taxes to help pay the bills and, if that source of income were to dry up, they would be short a good chunk of money.
In order to make up for the lost revenue, municipalities would be forced to raise property taxes on homeowners and businesses, or lay off workers, or cut services, or some combination of those three choices.
Raising property taxes is not an option mayors and first selectmen in western Connecticut -- or across the state -- would want to exercise, particularly at a time when budgets are already tight and taxpayers are not in the mood to hear about tax increases.
Few people want to see local layoffs or cutbacks in services.
Mark Boughton, the mayor of neighboring Danbury, is adamantly opposed to the governor's car tax proposal. The mayor, who is a possible Republican candidate to challenge the Democratic governor in 2014, claims a rollback in car taxes would cost his city close to $10 million and translate to a sizable tax increase.
Bethel First Selectman Matt Knickerbocker is a Democrat and almost assuredly won't be throwing his hat into the gubernatorial ring next year. Yet he, too, opposes Gov. Malloy's proposal, which Mr. Knickerbocker says would cost Bethel nearly $4 million and necessitate a tax hike in a town known for its frugality.
To be sure, Mr. Boughton and Mr. Knickerbocker have plenty of company among their peers across the state in opposing the proposal, since every town in Connecticut would be adversely affected.
In The Spectrum's circulation area, New Milford would stand to lose the most tax revenue -- close to $5 million.
We laud Gov. Malloy for his desire to bring about much-needed tax relief for the middle class and for lower-income families but, at this time, we call on him to withdraw his plan to eliminate the motor vehicle tax for many Connecticut residents.
If the governor does not do so, we urge the state legislature to remove the proposal from consideration during the 2013-15 budget-making process.
Rolling back the motor vehicle tax in isolation -- without providing other sources of revenue for municipalities or cutting back on some unfunded state mandates -- is simply not a good idea.
A better idea would be for the motor vehicle tax to be eliminated on a phased-in basis or in the context of broader tax reform.
The governor has a good idea, but he needs to rethink its timing, implementation and impact.