The tax hike du jour is apparently the auto excise rate, so
here is a quick update on it:
We were told once that the auto excise was created during
WWII to discourage the use of rubber that was needed for tanks. (?) Whatever the reason for its creation, it was still with us
in 1980, a much-hated annual tax of $66.00 per $1,000 of state-ascribed value that was
paid directly, not as part of the mortgage or withheld from the paycheck.
It was a particular shock to newcomers, most of whom had
never heard of an auto excise unless they came from one of the three other states that had one. Only about half the states
had some type of annual auto levy, usually a property tax.
So Proposition 2½, passed by Massachusetts voters in November 1980, cut not only the
property tax levy but the auto excise to 2.5 percent of value, or $25.00 per $1,000. This is
still the rate.
But the amount collected by all the cities and towns - that
was $266 million in 1980, and dropped to $112 million after Prop 2½ cut the rate - had risen to $534 million by
FY 2000, according to the Division of Local Services.
So legislators who are bemoaning the fact that the rate has
not increased in twenty years are missing the point: the revenues collected from cars that have greatly increased in
value are almost five times higher since the tax cut.
As we and our Mass. Auto Dealers allies predicted at the
time, the tax cut was good for business, and the increased car sales were good for state revenues.
So the Legislature should respect the will of the voters on
Proposition 2½ and leave the auto excise at $25.00 per $1,000.