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NBC 10 I-Team Exclusive: Man makes argument for keeping the car tax

You could call it Rhode Island’s most hated tax.

It’s despised by car owners who pay it and politicians who promise to get rid of it.

But not everyone thinks cutting or eliminating the car tax is a good idea.

The NBC 10 I-Team talked with one man who said the state should keep the car tax, with a few changes to make the system more equitable, and focus on cutting income taxes instead.

"I think when people hear all the facts, they can see that there's a better solution,” James Kennedy told the NBC 10 I-Team.

More often than not, you’ll find Kennedy riding RIPTA buses to get around town. He founded the group Transport Providence to advocate for better public transportation and less reliance on cars, especially in Rhode Island’s capital city.

“I think that we should make some changes to the car tax, but I think we should keep it,” Kennedy said.

Gov. Gina Raimondo has proposed basing car taxes on trade-in values, rather than clean retail values. That would save taxpayers an average of 30 percent.

But the savings would depend on what kind of car you own.

"If you own a $50,000 car, you're going to get a really big tax cut,” Kennedy said. “If you own a less expensive car, you're going to get a much smaller one."

Plus, cities and towns vary widely when it comes to how cars are taxed. Both tax rates and vehicle value exemptions depend on where you live.

For example, owning a 2015 Subaru valued at about $20,000 would result in a tax bill of about $200 in Jamestown, but more than $1,100 in Providence, even though the two vehicles are identical.

That’s why Kennedy wants Rhode Island to keep the car tax, but move to a “one state, one rate” system similar to Massachusetts.

In the Bay State, cars are taxed at $25 per thousand, regardless of where you live. That change could mean people in cities and towns with the lowest car tax rates, like Charlestown, Little Compton and Block Island, actually end up paying more.

Pawtucket Mayor Don Grebien, who heads Rhode Island’s League of Cities and Towns, said communities agree the car tax system needs to be reformed. But so far, there’s no clear consensus on how to make the tax fair between communities without hurting taxpayers.

"I think everybody agrees that there has to some sort of a change,” Grebien said. “It's, where does the burden go? Where does the burden shift?"

Another problem with reducing or eliminating the car tax, Kennedy said, is that people who don’t own cars get no tax break whatsoever. Cutting income taxes instead would give money back to middle class and low-income Rhode Islanders, regardless of the value of their cars, he said.

"You wouldn't be giving a tax cut to someone that has three BMWs,” he said. “You'd be giving a tax cut to someone that rides the bus or has a junker vehicle."

House Speaker Nick Mattiello campaigned on car tax reform, winning a tight race for reelection in part on a promise to get rid of the hated tax within five years. A spokesman confirmed to the I-Team that Mattiello wants the tax gone, not simply reduced as suggested by Raimondo. The details of how cities and towns would be reimbursed by the State for lost car tax revenue still have to be worked out, and the Speaker has yet to unveil specifics of his plan.

Kennedy said income tax reduction should be the focus instead, although he realizes car tax reform is a popular idea.

"Politicians don't want to stick their necks out and say something that's unpopular. That's why I'm out here to push them,” he said

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