Rhode Island eliminates car tax in revised budget proposal
PROVIDENCE, R.I. (WJAR) — Rhode Island's car tax would be eliminated immediately in a new budget plan to be unveiled Thursday night.
The state has been phasing out the car tax over the past five years, and the plan was to end it next year.
In addition, the budget calls for a $250 per child tax credit for people who make less than $100,000 annually, at a cost of $43 million, and there would be no increase in unemployment taxes.
Rhode Island has a nearly $900 million surplus to work with.
Eliminating the car tax would provide $64 million in taxpayer relief, House Speaker Joe Shekarchi said at an afternoon news conference on the budget with Gov. Dan McKee and Senate President Dominick Ruggerio.
"It'll be gone for good," Shekarchi said.
Ruggerio said any vehicle with a value over $6,000 would not be taxed starting next year. Cars valued less than that are already exempt. McKee estimated that 490,000 cars and trucks in the state are currently taxed.
"We want to have competitive edges in every place we can possibly afford to make happen with our neighboring states," McKee said. "Rhode Island will be that state that will not have a vehicle tax. That's extraordinary."
East Providence would lag a year in seeing the elimination of the car tax because the city operates under a different fiscal year than every other community in the state.
The new budget proposal also sees Rhode Island picking up the tab of issuing new license plates starting later this year, instead of charging people a new plate fee of $8.
On cutting the state sales tax rate, an idea he's previously floated, McKee said: "I am interested in lowering the sales tax. It's not the moment to do it."
The governor said it is something that he will work on for next year's budget.
The speaker said lowering the sales tax is something for the long-term.
"The money we have right now is all one-time money," Shekarchi said. "We don't know if we're going to have that money next year, and we would lower the tax this year and we would have to raise it back next year is very possible outcome, so we want to study that more long term."
Shekarchi also said the benefits of suspending the gasoline tax are unclear and the move doesn't necessarily result in lower prices.
"You've seen what they've done in Connecticut, and it's really had very little effect on what people are paying at the pump," he said.
He said eliminating the car tax has tangible benefits for Rhode Islanders.
At a second budget briefing Thursday night, Shekarchi said there was no allocation in the budget for the Pawtucket soccer stadium. The city of Pawtucket and the developer said they needed an additional $30 million to cover cost increases.
McKee at the earlier briefing said talks about the stadium are ongoing.
"We’re going to do the right thing by the taxpayers and I believe that we are in conversation. I know we are, because I had conversations with the developer yesterday. I think we’re heading in a direction that I believe I’ll be able to propose something that’s both good for the taxpayer and makes sure that project continues as it’s planned," McKee said.
The stadium is the focal point of the Tidewater Landing project along the Seekonk River.