Stamford resident Robert Holtz didn’t like the letter Mayor Caroline Simmons sent with this year’s car tax bill.
Simmons wrote that her administration, “recognizing the rising cost of living … worked hard to minimize tax increases to an average of 1 percent.” The 2022-23 budget was not built “on the back of our taxpayers,” Simmons wrote. Instead, “we found cost savings to … hold the line” on tax increases.
“Apparently, that only applies to buildings,” Holtz said. “It doesn’t apply to cars, because the tax on one of my cars went up 13.5 percent, and the tax on the other car went up 14.5 percent.”
It irked him when Simmons wrote, a few sentences later, “For the tenth year in a row, there is no increase in the car tax rate.”
It’s true that the tax rate on motor vehicles remains at 27.25 mills, “but there is an increase in the car tax,” Holtz said.
“I understand it’s because the price of used cars has gone up, so even if the tax rate remains flat, the amount of the tax increases,” he said. “The mayor’s office does not control the price of used cars, but they could have lowered the mill rate like they do when housing values jump after a revaluation. They could have done that for cars if they chose, but they didn’t. So don’t write a self-congratulatory letter. It’s disingenuous.”
High car taxes are a result of the COVID-19 pandemic and the supply-chain disruptions it created.
When the pandemic hit, manufacturers of semiconductor chips in China shut down operations. Without the chips, new cars didn’t get made. Because new cars became scarce, prices went up, and because there were fewer new cars, prices of used cars went up, too.
Fortune reported June 11 that the cost of a new car is 12.6 percent more than last year, and hit a national average of $47,148 in May.
Used car and truck prices rose even more, 16 percent, Fortune reported, and many times a used car costs more than a new one of the same model.
“It’s surprising,” Holtz said. “A car is a year older, has another 12,000 miles on it, but the value of it goes up more than it depreciates.”
That’s why it’s time to change how motor vehicles are valued, said Karl Wagner of Stamford, whose car tax bill increased 9 percent.
Wagner said the total tax bill for his 20-year-old car and two 4-year-old cars this year was $1,404, compared with $1,288 last year. With the car market still in flux, it’s impossible to predict what will happen next year, Wagner said.
“As the economy gets back to some kind of normal, used-car values will go down, which means tax revenues will go down,” Wagner said. “I would say to the city that we, the people, would like a predictable tax bill and you, the city, would like predictable tax revenue. So don’t use annual market value. Pick a depreciation schedule.”
Simmons spokeswoman Lauren Meyer said in an email that valuing motor vehicles by a depreciation schedule is complex and requires determining the original manufacturer’s suggested retail price for 95,000 vehicles registered with the city, then applying the prices manually or paying a vendor to input them into the account provided by the state Department of Motor Vehicles. The cost of that is unknown, according to Meyer’s email.
To value motor vehicles, the city uses the guide published by the National Automobile Dealers Association, owned by J.D. Powers, Meyer said. The DMV prices all registered vehicles using the company’s October guide.
“It’s not a state law but an agreement between J.D. Powers and the Connecticut Association of Assessing Officers in conjunction with the State Office of Policy and Management,” Meyer’s email states. “This way all vehicles are priced using the same values [which] helps to establish fair and equitable values throughout the 169 municipalities.”
Asked whether there was a consideration to lower the motor vehicle tax rate to accommodate higher prices, Meyer said the Board of Finance, which sets mill rates, decided to leave the rate flat because valuations were continuing to fluctuate.
Car-tax relief was a topic of the legislative session this year, when state lawmakers targeted 75 municipalities where mill rates are high. They passed legislation that reduces the rate cap from 45 mills to 32.46 mills. So, in a town with a motor vehicle tax rate of 50 mills, owners now will pay 32.46 mills, and the state will reimburse the town for the difference, according to information from the state.
Like Holtz, Wagner thinks Simmons’ letter to taxpayers glossed over what’s really happening.
With the unusual market fluctuations, “the situation has changed,” Waagner said. “The city should change, too, so when a person looks at their tax bill and the mayor says it’s a 1 percent tax increase, you get a 1 percent tax increase.”
That’s important now, when people are feeling the pain of inflation, Holtz said.
“No one wants to pay more, but everyone now is paying more — for heating oil, gas, electricity, food,” Holtz said. “You hear about things going up 10 percent or 15 percent. It’s really taking a bite out of people’s pocketbooks.”