If you grumble every time you write out a check for property taxes on your car, you now have reason to fire your engines and celebrate. Or at least to thank your local representative and senator.
In the waning moments of the 1998 Legislature, lawmakers dumped the traditional and much-maligned property tax system on automobiles, replacing it with a system of flat fees that is easy to understand and even easier for tax collectors to manage.And the new system will mean big tax breaks for those with newer, more-expensive cars, and fewer surprises for everyone when he opens his car registration envelope.
For newer cars, the new fee is only $150 (see chart). Compare that to the $400 to $500 in property taxes currently being paid on most cars in the $25,000 to $35,000 range.
"With the price of new automobiles, the property tax (on cars) was becoming a massive tax burden that was patently unfair," said Sen. George Mantes, D-Tooele, bill sponsor. "So, we replaced it with something people can understand, and we capped it so it cannot spiral out of control like the property tax has."
Lawmakers also tweaked a complicated problem regarding the state property tax, averting a massive shift of taxes from large industries to homeowners and small businesses.
But where the Legislature giveth, it also taketh away. Utahns will pay more for a variety of government services. Fishing licenses were raised from the current fee of $18 to $20. Small game licenses were raised $1, and the habitat fee was raised 75 cents.
Lawmakers also increased the 911 monthly surcharge on your phone bill, currently at 50 cents a month, by a dime. That money will go to the Poison Control Center. They also imposed a $10 surcharge on all traffic violations in Salt Lake County.
Lawmakers also increased your state income taxes by doing nothing at all. Because of federal income tax reforms, Utahns will have more money in their wallets after Uncle Sam gets through. And that means more money on which to base the state income tax.
Analysts estimate that Utahns will pay about $17.50 more in state income taxes for each child in their home.
"It works both ways," said Rep. Marty Stephens, R-Farr West and co-chairman of the Executive Appropriations Committee. "When the federal government raised taxes, it resulted in less state income tax revenue, and we did not adjust the tax to compensate."
Lawmakers raised the rental car tax from the current 3 percent to a more hefty 7 percent. If you rent the car at the Salt Lake International Airport, the tax on rental cars will be about 25 percent after additional rental car taxes and surcharges are added to the 7 percent.
The revenue from the rental car tax will be used to pay back a $39 million bond being used to pay for expansion of the Salt Palace.
"All in all, it was a good year for taxpayers," Stephens said. "We did what we did with roads and education, and still we did not raise taxes."
Of course, that depends on how you look at it.
- Car rental tax increased to 7 percent.
- Fishing licenses up $2.
- Small game hunting licenses up $1.
- 911 service fees up by 10 cents a month.
- Income taxes up by $17.50 per child.
- A $10 surcharge on traffic tickets in Salt Lake County.
- Manufacturers lose part of a sales tax exemption.
- Businesses receive a tax credit for research and development.
- Lagoon gets a sales-tax exemption for new equipment.
- Car taxes for newer automobiles reduced.
- A property tax shift to homeowners is averted.
Tax proposals not passed
- Removing the sales tax on food.
- Giving property tax breaks to second-home owners.
- Restructuring income-tax brackets.
What your car taxes will be under the flat-fee system:
New cars: $150 at the time of purchase
Cars 1-2 years old: $150
Cars 3-5 years old: $114
Cars 6-8 years old: $80
Cars 9-11 years old: $50
Cars 12 years old and older: $10