Chapter 301

2006 -- S 3070 AS AMENDED

Enacted 07/04/06

A N A C T

RELATING TO TAXATION -- MOTOR VEHICLE AND TRAILER EXCISE TAX ELIMINATION ACT OF 1998

Introduced By: Senators J Montalbano, Paiva-Weed, and McBurney

Date Introduced: May 03, 2006

It is enacted by the General Assembly as follows:

     SECTION 1. Section 44-5-11.8 of the General Laws in Chapter 44-5 entitled "Levy and

Assessment of Local Taxes" is hereby amended to read as follows:

44-5-11.8. Tax classification. -- (a) Upon the completion of any comprehensive

revaluation or any update, in accordance with section 44-5-11.6, any city or town may adopt a tax

classification plan, by ordinance, with the following limitations:

      (1) The designated classes of property shall be limited to the four classes as defined in

subsection (b) of this section.

      (2) The effective tax rate applicable to any class excluding class 4 shall not exceed by

fifty percent (50%) the rate applicable to any other class, except in the city of Providence, and

the town of Glocester; however, in the year following a revaluation or statistical revaluation or

update, the city or town council of any municipality may, by ordinance, adopt tax rates for the

property class for all ratable tangible personal property no greater than twice the rate applicable to

any other class provided that the municipality documents to, and receives written approval from

the office of municipal affairs that the rate difference is necessary to ensure that the estimated tax

levy on the property class for all ratable tangible personal property is not reduced from the prior

year as a result of the revaluation or statistical revaluation.

      (3) Any tax rate changes from one year to the next shall be applied such that the same

percentage rate change is applicable to all classes, excluding class 4, except in the city of

Providence, and the town of Glocester.

      (4) Notwithstanding subdivisions (2) and (3) of this subsection, the tax rates applicable

to wholesale and retail inventory within Class 3 as defined in subsection (b) of this section are

governed by section 44-3-29.1.

      (5) Notwithstanding subdivisions (2) and (3) of this subsection, the The tax rates

applicable to motor vehicles within Class 4 as defined in subsection (b) of this section are

governed by section 44-34.1-1.

      (6) The provisions of chapter 35 of this title relating to property tax and fiscal disclosure

applies to the reporting of and compliance with these classification restrictions.

      (b) Classes of Property.

      (1) (i) Class 1: Residential real estate consisting of no more than five (5) dwelling units,

land classified as open space, and dwellings on leased land including mobile homes. In the city of

Providence, this class may also include residential properties containing partial commercial or

business uses and residential real estate of more than five (5) dwelling units. A homestead

exemption provision is also authorized within this class, provided however, that the actual

effective rate applicable to property qualifying for this exemption shall be construed as the

standard rate for this class against which the maximum rate applicable to another class shall be

determined, except in the city of Providence, and the town of Glocester.

      (2) Class 2: Commercial and industrial real estate, residential properties containing

partial commercial or business uses and residential real estate of more than five (5) dwelling

units. In the city of Providence, properties containing partial commercial or business uses and

residential real estate of more than five (5) dwelling units may be included in Class 1.

      (3) Class 3: All ratable tangible personal property.

      (4) Class 4: Motor vehicles and trailers subject to the excise tax created by chapter 34 of

this title.

      (c) The city council of the city of Providence, and the town council of the town of

Glocester may by ordinance provide for and adopt a tax rate on various classes as it shall deem

appropriate. Providence and Glocester shall be able to establish homestead exemptions up to fifty

percent (50%) of value. The calculation provided in subsection (b)(1)(i) shall not be used in

setting the differential tax rates. The tax rate for Class 2 shall not be more than two times the tax

rate of Class 1; the tax rate applicable to Class 3 shall not exceed the tax rate of Class 1 by more

than two hundred percent (200%).

      (d) Notwithstanding the provisions of subsection (a) of this section the town council of

the town of Middletown may hereafter, by ordinance, adopt a tax classification plan in

accordance with the provisions of subsections (a) and (b) of this section, to be applicable to taxes

assessed on or after the assessment date of December 31, 2002.

      (e) Notwithstanding the provisions of subsection (a) of this section, the town council of

the town of Little Compton may hereafter, by ordinance, adopt a tax classification plan in

accordance with the provisions of subsections (a) and (b) of this section and the provisions of

section 44-5-79, to be applicable to taxes assessed on or after the assessment date of December

31, 2004.

     SECTION 2. Section 44-34.1-1 of the General Laws in Chapter 44-34.1 entitled "Motor

Vehicle and Trailer Excise Tax Elimination Act of 1998" is hereby amended to read as follows:

44-34.1-1. Excise tax phase-out. -- (a) (1) Notwithstanding the provisions of chapter 34

of this title or any other provisions to the contrary, the motor vehicle and trailer excise tax

established by section 44-34-1 may be phased out. The phase-out shall apply to all motor vehicles

and trailers, including leased vehicles.

     (2) Lessors of vehicles that pay excise taxes directly to municipalities shall provide

lessees, at the time of entering into the lease agreement, an estimate of annual excise taxes

payable throughout the term of the lease. In the event the actual excise tax is less than the

estimated excise tax, the lessor shall annually rebate to the lessee the difference between the

actual excise tax and the estimated excise tax.

     (b) Pursuant to the provisions of this section, all motor vehicles shall be assessed a value

by the vehicle value commission. That value shall be assessed according to the provisions of

section 44-34-11(c)(1) and in accordance with the terms as defined in subsection (d) of this

section; provided, however, that the maximum taxable value percentage applicable to model year

values as of December 31, 1997, shall continue to be applicable in future year valuations aged by

one year in each succeeding year.

     (c)(1) The motor vehicle excise tax phase-out shall commence with the excise tax bills

mailed to taxpayers for the fiscal year 2000. The phase-out, beyond fiscal year 2003, shall be

subject to annual review and appropriation by the general assembly. The tax assessors of the

various cities and towns and fire districts shall reduce the average retail value of each vehicle

assessed by using the prorated exemptions from the following table:

     Local Fiscal Year State fiscal year

     Exempt from value Local Exemption Reimbursement

     fiscal year 1999 0 $1,500

     fiscal year 2000 $1,500 $2,500

     fiscal year 2001 $2,500 $3,500

     fiscal year 2002 $3,500 $4,500

     fiscal years 2003, 2004

     and 2005 $4,500 $4,500

     for fiscal year 2006 and

     each year thereafter $5,000 $5,000

      No city or town shall, in preparation of its annual budget, plan or otherwise rely on the

continuation of said phase-out beyond fiscal year 2003, unless it is specifically approved by the

general assembly.

     (2) The excise tax phase-out shall provide levels of assessed value reductions until the tax

is eliminated or reduced as provided in this chapter.

     (3) Current exemptions shall remain in effect as provided in this chapter.

     (4) The excise tax rates and ratios of assessment shall not be greater than be maintained at

a level identical to the level in effect for fiscal year 1998 levels for each city, town, and fire

district; provided, in the town of Johnston the excise tax rate and ratios of assessment shall not be

greater than be maintained at a level identical to the level in effect for fiscal year 1999 levels and

in no event shall the final taxable value of a vehicle be higher than assessed in the prior fiscal

year, and the levy of a city, town, or fire district shall be limited to the lesser of the maximum

taxable value or net assessed value for purposes of collecting the tax in any given year.

     (d) Definitions.

     (1) "Maximum taxable value" means the value of vehicles as prescribed by section 44-34-

11 reduced by the percentage of assessed value applicable to model year values as determined by

the Rhode Island vehicle value commission as of December 31, 1997, for the vehicles valued by

the commission as of December 31, 1997. For all vehicle value types not valued by the Rhode

Island vehicle value commission as of December 31, 1997, the maximum taxable value shall be

the latest value determined by a local assessor from an appropriate pricing guide, multiplied by

the ratio of assessment used by that city, town, or fire district for a particular model year as of

December 31, 1997.

     (2) "Net assessed value" means the motor vehicle values as determined in accordance

with section 44-34-11 less all personal exemptions allowed by cities, towns, fire districts, and the

state of Rhode Island exemption value as provided for in section 44-34.1-1(c)(1).

(e) If any provision of this chapter shall be held invalid by any court of competent

jurisdiction, the remainder of this chapter and the applications of the provisions hereof shall not

be effected thereby.

     SECTION 3. This act shall take effect upon passage and shall apply retroactively to June

29, 2000.

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LC03079/3

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