Scott MacKay Commentary: Rhode Island's Unfair 'Cah Tax'

Jan 6, 2017

Rhode Island House Speaker Nicholas Mattiello wants to get rid of the car tax. RIPR political analyst Scott MacKay says this is a good idea, if lawmakers can find the money to pay for it.

It’s officially known as the “motor vehicle excise tax.’’  But Rhode Islanders know it as the dreaded "cah tax," and spit it out as if were an expletive.

One of the many bad elements of this tax is that it varies so much by where you live. If you own a car valued at $14,000, you pay $183 a year if your residence is wealthy East Greenwich. In hardscrabble Central Falls, that same car is taxed at $620, according to data from the Rhode Island League of Cities and Towns. In the summer playground of Block Island a $14,000 vehicle is taxed at $127, but in the seen-better-days mill city of Pawtucket, it’s $720.

It’s a system that doesn’t take into consideration the wealth of a community or the economic status of the motorist. In the island community of Jamestown, the first $6,000 of a vehicle’s value is exempt from taxation. In working-class Johnston and North Providence, the exemption is just $500.

It’s a difficult tax to administer. Unlike houses or office buildings, cars are mobile. You can’t move a house. So if you don’t pay your taxes a community can put a lien on it. When a car owner moves to another state, it’s sayonara Rhode Island. Have fun collecting that tax.

Arguably the worst of the car tax is the cynicism and disrespect of  government it engenders. Cheating is common. What are you supposed to think when that new BMW with Florida plates cuts off your Taurus on Route 95 in January?

One window into the extent of cheating and scoffing at this law is the experience in Providence. The lovely neighborhoods on the capital city’s East Side make up one of the best urban residential areas between the Back Bay and Georgetown. The leafy streets around Brown University and Blackstone Boulevard are also home to some of Rhode Island’s richest residents.

Yet, those mansions and the historic manses on Benefit Street long concealed a form of car tax evasion that isn’t available to most working-class and middle-class homeowners and motorists in our state’s largest city. They don’t have summer homes in such low-tax playgrounds as Little Compton, Block Island and Newport or winter homes in Fort Myers or Tampa.

Everybody who is anybody in Providence government and the business community knew about this for decades. But when questions were posed at City Hall, the usual reaction was a shrugged shoulder and the ole "Hey, whattagonnado??"

Finally, City Councilor Sam Zurier decided to do something. Providence has a property tax break  for homeowners who claim their home is their primary residence . It allows homeowners to get a 50 percent break on real estate values for a primary residence. For years, wealthy East Siders, for house tax purposes were claiming that Providence is their primary dwelling, while telling the state Division of Motor Vehicles that their second home was their primary residence.

Zurier put a stop to it after campaigning door-to-door in 2010. He heard a constant complaint about some of his constituents not playing by the rules. His new rule required Providence residents to register their cars in the capital city to qualify for the House tax break.

The result: The city harvested about $6 million in new revenue, which astounded many at cash-strapped City Hall.

Eliminating this tax isn’t a new idea. During the economic boom of the 1990s, the legislature and then-Gov. Lincoln Almond worked out a long-term plan to phase it out. But after the 2008 recession, then-Gov. Don Carcieri and lawmakers reversed course. They shifted the burden for collecting this nettlesome tax to communities and allowed communities to slash the exemption from $6,000 to as low as $500.

Mattiello has so far declined to say in any realistic detail how he plans to finance a phase-out of this tax. There are many ways to accomplish this –Massachusetts, for example, sets a statewide rate of $25 per $1,000 in vehicle value. So car owners in Wellesley pay the same rate as those in Fall River.

The speaker needs to be much more transparent about how he plans to pay for his good idea. It would be great, for once, if lawmakers pass a measure that would actually put money back in the pockets of Rhode Islanders.

Scott MacKay’s commentary can be heard every Monday morning on Rhode Island Public Radio at 6:45 and 8:45 and at 5:44 p.m. You can also follow his political analysis and reporting at our "On Politics" blog at RIPR.org.