Rep. David A. Coughlin Jr. has introduced legislation (2016-H 8070) that would eliminate the motor vehicle and trailer excise tax by fiscal year 2019. In order to reimburse the state’s cities and towns for the lost tax revenue, the legislation establishes that lost revenue would be made up from the state sales tax and lottery revenue.
“The much-maligned car tax was supposed to be a temporary measure when it was instituted many years ago; yet, it continues to plague Rhode Island citizens every single year. It’s time we follow the original intent of this tax and eliminate its burden on the taxpayers,” said Representative Coughlin (D-Dist. 60, Pawtucket).
Currently, the tax exemption is $500 of the vehicle’s value, but, some communities provide additional exemption amounts for their residents. In order to eliminate the car tax gradually, the legislation states that by fiscal year 2017, the exemption would jump to $5,000 and would increase again in fiscal year 2018 to $10,000. By fiscal year 2019, the car tax would be eliminated and lost tax revenue to the cities and towns would be reimbursed through the state’s general fund.