Thursday, May 14, 2009
Car tags going up anyway
By SUE WATSON
The settlement of the additional 50 cents a pack sales tax on cigarettes in the Mississippi Legislature last week and the expected signature of the governor on the bill won’t reinstate all the savings motorists have been getting from the Legislative Tag Credit.
Mississippi’s cigarette tax would go from 18 cents to 68 cents a pack.
“The car tags are still going up,” said Betty Byrd, Marshall County tax collector. “The State Tax Commission set the Legislative reimbursement credit back from 5.5 percent of the assessed value of a vehicle to 3 percent.”
Byrd said most vehicle owners have not noticed, but the rate changes almost every year.
“The 3 percent is the lowest it has ever been,” she said. “I was hoping they would leave it at 5.5 percent.”
The greater the percentage the Legislature sets the rate, the more the state reimburses counties for a motor vehicle tag and that means the vehicle owner pays less for the tag. This year 2009 owners will pay a greater portion of their car tag bill since the state has decided to pay less of it.
“I was hoping they would leave it at 5.5 percent, but this year the State Tax Commission recommended 3 percent and the Legislature signed it into law.”
The highest the rate has ever been is 6 percent, Byrd said. And she expects the Legislature to raise the rate back up next year.
So even though the Legislature raised the sales tax on a package of cigarettes, and a portion of that tax will go to the Legislative Tag Credit, drivers will pay a greater portion of their car tag bill after July 1, 2009, than they did last year.
Byrd provided some examples to help explain how much more a vehicle owner can expect to pay on tags this year if the owner lives in Holly Springs. Those who live outside the city but pay city school taxes would pay slightly less for their tags and those who live in the county and pay county school taxes would pay the least for the same vehicle.
A 2008 Chevy Impala valued by the state at $16,803 would be assessed at 5,046. Without the Legislative tag credit the tag would cost the owner $804.62 and under the old 5.5 percent tag credit rate the owner would have paid only $527.09. The same vehicle under the new rate of 3 percent will cost the owner $653.24 - or $126.15 more.
A 2004 Toyota pickup is valued by the state at $3,863 and with the tag credit under the 5.5 percent rate, the owner would pay $196.97 but only $133.61 with the tag credit. With the 3 percent tag credit rate to be applied after July 1, the cost of the tag for the 2004 Toyota will be $162.41 or $28.80 more than at the 5 percent rate.
A 1998 Ford Crown Victoria, a 10-year-old vehicle, would be assessed in value by the state $333.00. Under the old 5.5 percent tag credit rate the owner would pay $37.62 but with the reduced tag credit rate of 3 percent, the owner will pay $40.12.
Byrd said the tag credits help those who drive new or expensive luxury cars and pay more in car tags. Individuals who own old vehicles are affected least by the change in the tag credit rate because they are paying the least or very least for their tag already. Approximately 3,500 tags (or registration stickers) are purchased at the tax collector's office each month.
Besides the 5 percent sales tax on new cars and on casual car sales that provides a revenue stream for the Legislative Tag Credit Fund, the cigarette tax increase will help add more revenue into this fund, Byrd said.
Figures released by Gov. Haley Barbour last week in his budget recommendation included an anticipated $106 million in revenue from the cigarette tax increase. Only a portion of the revenue raised from the increased cigarette tax will go to the Legislative Tag Credit Fund.
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