Big Changes Proposed For CT's Car Tax

HARTFORD, CT — The state legislative session appears to be shaping up to be a big conversation about regionalization and more equal taxation. Already there has been a lot of talk over bills that would force smaller school districts to regionalize.

Another bill introduced by State Senate President Martin Looney would make sizeable changes to car and property taxes throughout the state.

Looney’s bill would repeal the municipal car tax and instead institute a statewide rate between 15 and 19 mills. The money would then be redistributed to municipalities through the payment in lieu of taxes program, education cost sharing and special education grants.

Currently each town sets its mill rate for car taxes up to a maximum of 45 mills. Critics of the system say it benefits residents of low mill rate towns like Greenwich, New Canaan and Darien while it hurts residents of cities like Bridgeport, Hartford and New Haven which have higher mill rates.

See related: School Regionalization Bills Has Smaller Towns Concerned

Unlike real estate, a car’s value doesn’t change whether it’s parked in Greenwich or Bridgeport. A person who owns a $41,000 Mercedes in Greenwich would pay about $328 a year in taxes while a Hartford resident who owns a Honda Civic valued around $20,000 would pay about double that, according to the Hartford Courant.

Gov. Ned Lamont talked about the inequitable car tax issue on the campaign trail, but didn’t put forth a formal proposal.

Some residents register their cars out of state or in lower tax municipalities in order to avoid a hefty annual car tax bill.

Proponents of the current car tax system have argued that it rewards towns that budget wisely and keep a low mill rate.

Doing away with the local car tax is a perennial issue nearly every legislative session, but it typically gets little consideration. That could change this year now that the issue is being introduced early in the session and is backed by Looney and several other legislators.

The bill also includes a “homestead” exemption, which would essentially knock off $50,000 of assessed value for one to four-family owner-occupied homes. It would benefit homeowners of lower-assessed property more than those who own more expensive homes.

Looney’s bill also would include a one-mill state property tax on top of municipal taxes with money going to higher mill rate towns in order to help them lower their mill rates, according to the New Haven Independent.

The bill would also change how PILOT funds are distributed, according to the Independent. Currently funds are distributed at an equal rate to municipalities with the total amount dependent on the percentage of tax-exempt properties. The bill would boost the rate in towns and cities where there is more tax-exempt property, which would be a benefit to a city like New Haven where Yale University and Yale-New Haven Hospital own a sizable portion of land.

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