Thursday, April 9, 2009
Drop in car sales creates monster for Legislature
By SUE WATSON
Mississippi motorists may begin paying nearly double for their motor vehicle registration tags if the State Legislature does not find a way soon to replenish a revenue stream that, beginning in 1994, paid half the car tag fee for motorists.
The old revenue stream that provided a tag credit from the Legislative Tag Credit Fund came from a sales tax put on new car sales, according to Rep. Tommy Woods. New car buyers paid 5 percent of the cost of their vehicle into the legislative fund to help reduce car tag ad valorem taxes for every motorist in the state, he said.
But due to a deep recession nationwide beginning in December 2007, people are putting off buying new cars and the Legislative Tag Credit Fund has gone in the red by about $7 million and could be in the red by $25 million by July 1, according to tax collector Betty Byrd. That means that unless the Legislature finds a new source of revenue for this fund, the cost of a car tag will fall back on the vehicle owner, she said.
Here are some of the facts.
Byrd said her office collected just over $50,000 in sales tax revenue on new vehicle tags for the month of March 2009.
“Normally we would have collected between $100,000 and $150,000 in March and that shows the statewide trend in car sales are reflected here in Marshall County,” she said. “New car sales are down and it is breaking the State Tag Credit Fund.”
The State Legislature could dip into the “Rainy Day” fund to make up the shortfall in revenue to reimburse the counties for the tag credit or it could find the money elsewhere by increasing the sales tax on cigarettes, a solution that the Legislature has been looking at for about a month or two.
Byrd said if the Legislature does not find a source of revenue for the tag fund, she believes counties will have to start charging the full tag tax to vehicle owners July 1.
She said the problem with the dried up Tag Credit Fund was noticed at her office in February.
“January was the first month the fund was so short that we didn’t get the full reimbursement in February,” she said. “In February we were shorted $16,000 for the month of January.”
In March the county was supposed to get the $16,000 it was shorted in January plus the full credit for February. What happened is the state tag credit fund sent the county a check for the $16,000 it didn’t send in January but shorted the county $78,000 of the February money it was owed, Byrd said.
Now the March collection has been accounted for and the State Tag Credit Fund owes the Marshall County Tax Collector’s office $180,000, Byrd said.
The money the counties collect on motorized vehicle tags (ad valorem taxes) goes to the coffers of the counties, the municipalities and the school districts.
Byrd said she believes the Legislature will fully reimburse the counties for the tag credit it is supposed to get through the end of June. But legislators could look at the rate and decide to curtail the amount it is willing to pay on the motor vehicle owner’s tag. As it stands, the Legislature has been paying up to 5.5 percent of the assessed value of the vehicle, thereby reducing the dollars the owner pays by about 50 percent, she said. The most the fund has ever payed is six percent of assessed value and the lowest is 4 percent, she said.
The Legislature has the option of paying less for the tag credit by dropping the 5.5 percent figure. The result would be that the vehicle owner will pay more for their tag (ad valorem tax) when they go in to renew it, Byrd said.
Should the Legislature fail to pass a bill that restores the Tag Credit Fund, such as a cigarette tax, every car owner will have to pay more.
“Everybody’s tag will go up each year until new car sales kick back up,” Woods said, if the Legislative measure (cigarette tax) fails.
News: (662) 252-4261 or email@example.com
Questions, comments, corrections: firstname.lastname@example.org
©2004, The South Reporter, All Rights Reserved.
No part of this site may be reproduced in any way without permission.
The South Reporter is a member of the Mississippi Press Association.
Site managed and maintained by
South Reporter webmasters Linda Jones, Kristian Jones
Web Site Design - The South Reporter
Back | Top of Page