Many register costly vehicles out of state

Many Utahns are registering their expensive motor homes and houseboats out of state, costing the state and counties hundreds of thousands of dollars in lost revenue, state lawmakers were told Wednesday.

Utah's sales taxes, property taxes and high registration fees make it "so we aren't competitive" in the selling of motor homes, said Homer Cutrubus of Cutrubus Motors in Layton. "We're making criminals out of good citizens" who save several thousand dollars a year by registering their motor homes in Montana, Oregon and Wyoming.

The Legislature's Revenue and Taxation Interim Study Committee didn't hear an exact number of homes, which can cost several hundred thousand dollars, and luxury houseboats are being registered out of state.

But they heard plenty about why it happens.

Roger Smith, a Bountiful resident who says his motor home is worth about $130,000, said he paid $1,882 this year just to register it.

Pointing to an advertisement in Motor Homes magazine, he said he could hire an attorney in Montana who for $350 would create a limited partnership, just for his motor home, and he could license and register his vehicle there for only a couple of hundred dollars a year.

"I have an old friend who just bought a $400,000 motor home, and he'd have to pay $5,800 a year to register it here," Smith said. "My guess is 60 percent of the (Utah) owners of high-end motor homes are now registering them out of state, saving thousands of dollars" over the 10 years a person may own such a vehicle.

Smith, Cutrubus and Rep. Lou Shurtliff, D-Ogden, said the solution is to have motor homes and houseboats pay a flat property tax and registration fee each year based on the item's age and size, instead of fair market value.

In 1998, legislators switched the yearly property tax for cars and light trucks from an ad valorem tax to a flat fee based on the age of the vehicle. Where before an owner of a new, expensive car could pay $400 or $500 a year in property taxes, now the fee is a flat $150 for all new cars, regardless of their price.

The process is easier, simpler, and citizens like it, said Salt Lake County Assessor Lee Gardner.

And while it makes sense to adopt a similar system for motor homes and houseboats, some small counties that see a lot of such high-end movable properties in their RV parks and marinas could see their tax revenues drop, local officials warned.

There's another problem, said Wayne Jones, a spokesman for the off-road vehicle dealership association. Under the current property tax system, when a motor home owner trades in his old vehicle for a new one, he has to pay that year's property tax even if his registration decal doesn't expire for months.