RICHMOND, Va. -- There is plenty of holiday spirit in Carytown, and as shoppers flood the district this holiday season, look closely enough and you'll see hundreds of tax bills driving down the street.
Local governments levy a tax on registered vehicles in their city or county to raise revenue, but Governor Glenn Youngkin is pushing to eliminate the "hated" car tax - a personal property bill car owners get once a year that is usually several hundred dollars.
Each city and county set rates at which they tax vehicle owners based on the assessed values of their vehicles.
Youngkin made the ask of state lawmakers and local leaders while rolling out his two-year budget plan Wednesday.
"Everywhere I go, I consistently hear please help us get rid of the car tax," Youngkin said. "The car tax belongs in the trash can, not your mailbox.”
Significantly, Youngkin did not include the elimination of the car tax in his budget plan.
Local governments rely on this and other forms of personal property tax to fund services.
Youngkin said he would like to see an increase in local sales tax to offset the cost of eliminating the car tax.
"We can work in collaboration with local governments to settle on an increase in local sales and use taxes over the broadened sales and use tax base, including closing the tech tax loophole," he said.
Elimination of the car tax has been a politically potent issue in Virginia before.
Many credit Governor Jim Gilmore's campaign to get rid of the car tax entirely with election victory just before the turn of the century.
Still, even the rollback of the car tax Gilmore shepherded through the legislature was capped a few years later after policymakers found it was not financially sustainable to eliminate it while facing headwinds in the overall economy during the early 2000s.
"[Gilmore] was elected governor on the pledge of ‘no car tax.’ That’s very, very different than what we have here," said CBS 6 Political Analyst Dr. Bob Holsworth.
Holsworth pointed out Youngkin just lost an election to Democrats, who control both chambers of the legislature come January, and sees little reason for Democrats — or local governments — to go along with Youngkin's idea.
“By and large, this is a local tax, and unless the state provides a reimbursement to the localities when they remove it, the localities simply aren’t going to get rid of it because the governor said he doesn’t like it, and then there’s the second point here, the governor lost the election," Holsworth said. "By and large, there's not meat to this proposal other than to say, 'people hate it, and why don't we do it.'"
Tito Chambers and his wife were visiting Carytown Thursday to get a couple's holiday massage.
Chambers used to work for a car dealership and supports cutting the car tax since a vehicle is a big-time financial commitment for most people.
“When you purchase a vehicle, you automatically pay tax initially, so it is very annoying, especially if you own multiple vehicles, to pay property tax every single year," Chambers said. "You’re going to have to pay that tax every year, but your tires are going to go, you’ll need an oil change, you’re going to have to get a new alternator. It can be very costly to own a vehicle, and inflation doesn’t help.”
For Daniel MacPhee, the car tax helps serve as a deterrent to car ownership, even if it was not intended to do so.
MacPhee's wife owns the sole vehicle in their family, and he would like to see more local governments investing in public transit and walkability.
"Increasing the sales tax to offset it is something I’m opposed to," MacPhee said of eliminating the car tax. “I think most taxes are generally unpopular, but I think cars are a luxury good, and they should be treated that way. I think a lot of people just by the way cities are designed are more or less forced to buy a car when they should be considered a luxury good.”
The General Assembly convenes in January, and to this point, there has not been legislation introduced to eliminate the car tax.
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