Chapter 571
2006 -- H 7723 SUBSTITUTE A
Enacted 07/11/06
A N A C T
RELATING
TO TAXATION -- THE TAXPAYER RELIEF ACT -- EXCISE TAX PHASE-OUT
Introduced
By: Representatives Giannini, McCauley, Moura, Pacheco, and Melo
Date
Introduced: February 28, 2006
It is enacted by the General Assembly as
follows:
SECTION 1.
Sections 44-34.1-1 and 44-34.1-2 of the General Laws in Chapter 44-34.1
entitled "Motor Vehicle and Trailer Excise
Tax Elimination Act of 1998" are 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
for fiscal year
2007 $6,000 $6,000
for fiscal year
2008 and each year thereafter the exemption and the state fiscal year
reimbursement shall be increased, at a minimum,
to the maximum amount to the nearest two
hundred and fifty dollar ($250) increment within
the allocation of one and twenty-two hundredths
percent (l.22%) of net terminal income derived
from video lottery games pursuant to the
provisions of section 42-61-15, and in no event
shall the exemption in any fiscal year be less than
the prior fiscal year.
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 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 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).
44-34.1-2.
City and town and fire district reimbursement. -- (a) In fiscal years
2000
and thereafter, cities and towns and fire
districts shall receive reimbursements, as set forth in this
section, from state general revenues equal to
the amount of lost tax revenue due to the phase out
or reduction of the excise tax. Cities and towns
and fire districts shall receive advance
reimbursements through state fiscal year 2002.
In the event the tax is phased out, cities and towns
and fire districts shall receive a permanent
distribution of sales tax revenue pursuant to section
44-18-18 in an amount equal to any lost revenue
resulting from the excise tax elimination. Lost
revenues must be determined using a base tax
rate fixed at fiscal year 1998 levels for each city,
town, and fire district, except that the Town of
Johnston's base tax rate must be fixed at a fiscal
year 1999 level.
(b) (1) The director
of administration shall determine the amount of general revenues to
be distributed to each city and town and fire
district for the fiscal years 1999 and thereafter so that
every city and town and fire district is held
harmless from tax loss resulting from this chapter,
assuming that tax rates are indexed to inflation
through fiscal year 2003.
(2) The director
of administration shall index the tax rates for inflation by applying the
annual change in the December Consumer Price
Index -- All Urban Consumers (CPI-U),
published by the Bureau of Labor Statistics of
the United States Department of Labor, to the
indexed tax rate used for the prior fiscal year
calculation; provided, that for state reimbursements
in fiscal years 2004 and thereafter, the indexed
tax rate shall not be subject to further CPI-U
adjustments. The director shall apply the
following principles in determining reimbursements:
(i) Exemptions
granted by cities and towns and fire districts in the fiscal year 1998 must
be applied to assessed values prior to applying
the exemptions in section 44-34.1-1(c)(1). Cities
and towns and fire districts will not be
reimbursed for these exemptions.
(ii) City, town,
and fire districts shall be reimbursed by the state for revenue losses
attributable to the exemptions provided for in
section 44-34.1-1 and the inflation indexing of tax
rates through fiscal 2003. Reimbursement for
revenue losses shall be calculated based upon the
difference between the maximum taxable value less
personal exemptions and the net assessed
value.
(iii) Inflation
reimbursements shall be the difference between:
(A) The levy
calculated at the tax rate used by each city and town and fire district for
fiscal year 1998 after adjustments for personal
exemptions but prior to adjustments for
exemptions contained in section 44-34.1-1(c)(1);
provided, that for the town of Johnston the tax
rate used for fiscal year 1999 must be used for
the calculation; and
(B) The levy
calculated by applying the appropriate cumulative inflation adjustment
through state fiscal 2003 to the tax rate used
by each city and town and fire district for fiscal year
1998; provided, that for the town of Johnston
the tax rate used for fiscal year 1999 shall be used
for the calculation after adjustments for
personal exemptions but prior to adjustments for
exemptions contained in section 44-34.1-1.
(c) (1) Funds
shall be distributed to the cities and towns and fire districts as follows:
(i) On October 20,
1998, and each October 20 thereafter through October 20, 2001,
twenty-five percent (25%) of the amount
calculated by the director of administration to be the
difference for the upcoming fiscal year.
(ii) On February
20, 1999, and each February 20 thereafter through February 20, 2002,
twenty-five percent (25%) of the amount
calculated by the director of administration to be the
difference for the upcoming fiscal year.
(iii) On June 20,
1999, and each June 20 thereafter through June 20, 2002, fifty percent
(50%) of the amount calculated by the director
of administration to be the difference for the
upcoming fiscal year.
(iv) On August 1,
2002, and each August 1 thereafter, twenty-five percent (25%) of the
amount calculated by the director of
administration to be the difference for the current fiscal year.
(v) On November
1, 2002, and each November 1 thereafter, twenty-five percent (25%)
of the amount calculated by the director of
administration to be the difference for the current
fiscal year.
(vi) On February
1, 2003, and each February 1 thereafter, twenty-five percent (25%) of
the amount calculated by the director of
administration to be the difference for the current fiscal
year.
(vii) On May 1,
2003, and each May 1 thereafter, twenty-five percent (25%) of the
amount calculated by the director of
administration to be the difference for the current fiscal year.
Provided,
however, the February and May payments shall be subject to submission of
final certified and reconciled motor vehicle
levy information.
(2) Each city,
town, or fire district shall submit final certified and reconciled motor
vehicle levy information by August 30 of each
year. Any adjustment to the estimated amounts
paid in the previous fiscal year shall be
included or deducted from the payment due November 1.
(3) On any of the
payment dates specified in paragraphs (1)(i) through (vii) of this
subsection, the director is authorized to deduct
previously made over-payments or add
supplemental payments as may be required to
bring the reimbursements into full compliance with
the requirements of this chapter.
(4) For the city
of East Providence, the payment schedule is twenty-five percent (25%)
on February 20, 1999, and each February 20
thereafter through February 20, 2002, twenty-five
percent (25%) on June 20, 1999, and each June 20
thereafter through June 20, 2002, which
includes final reconciliation of the previous
year's payment, and fifty percent (50%) on October
20, 1999, and each October 20 thereafter through
October 20, 2002. For local fiscal years 2003
and thereafter, the payment schedule is
twenty-five percent (25%) on each November 1, twenty-
five percent (25%) on each February 1, twenty-five
percent (25%) on each May 1, which includes
final reconciliation of the previous year's
payment, and twenty-five percent (25%) on each
August 1; provided, the May and August payments
shall be subject to submission of final
certified and reconciled motor vehicle levy
information.
(5) In the
event When the tax is phased out, funds distributed to the cities,
towns, and
fire districts for the following fiscal year
shall be calculated as the funds distributed in the fiscal
year of the phase-out. Twenty-five percent (25%)
of the amounts calculated shall be distributed to
the cities and towns and fire districts on
August 1, in the fiscal year of the phase-out, twenty-five
percent (25%) on the following November 1,
twenty-five percent (25%) on the following
February 1, and twenty-five percent (25%) on the
following May 1. The funds shall be distributed
to each city and town and fire district in the
same proportion as distributed in the fiscal year of the
phase-out.
(6) In the
When event the tax is phased out to August 1, of the following fiscal
year the
director of administration shall calculate to
the nearest tenth of one cent ($.001) the number of
cents of sales tax received for the fiscal year
ending June 30, of the year following the phase-out
equal to the amount of funds distributed to the
cities, towns, and fire districts under this chapter
during the fiscal year following the phase-out
and the percent of the total funds distributed in the
fiscal year following the phase-out received by
each city, town, and fire district, calculated to the
nearest one-hundredth of one percent (0.01%).
The director of the department of administration
shall transmit those calculations to the
governor, the speaker of the house, the president of the
senate, the chairperson of the house finance
committee, the chairperson of the senate finance
committee, the house fiscal advisor, and the
senate fiscal advisor. The number of cents, applied to
the sales taxes received for the prior fiscal
year, shall be the basis for determining the amount of
sales tax to be distributed to the cities and
towns and fire districts under this chapter for second
fiscal year following the phase-out and each
year thereafter. The cities and towns and fire districts
shall receive that amount of sales tax in the
proportions calculated by the director of
administration as that received in the fiscal
year following the phase-out.
(7) In the
When event the tax is phased out, twenty-five percent (25%) of the funds
shall
be distributed to the cities, towns, and fire
districts on August 1, of the following fiscal year and
every August 1 thereafter; twenty-five percent
(25%) shall be distributed on the following
November 1, and every November 1 thereafter;
twenty-five percent (25%) shall be distributed on
the following February 1, and every February 1
thereafter; and twenty-five percent (25%) shall be
distributed on the following May 1, and every
May 1 thereafter.
(8) For the city
of East Providence, in the event the tax is phased out, twenty-five percent
(25%) shall be distributed on November 1, of the
following fiscal year and every November 1
thereafter, twenty-five percent (25%) shall be
distributed on the following February 1, and every
February 1 thereafter; twenty-five percent (25%)
shall be distributed on the following May 1, and
every May 1 thereafter; and twenty-five percent
(25%) of the funds shall be distributed on the
following August 1, and every August 1
thereafter.
(9) As provided
for in section 44-34-6, the authority of fire districts to tax motor vehicles
is eliminated effective with the year 2000 tax
roll and the state reimbursement for fire districts
shall be based on the provisions of section
44-34-6. All references to fire districts in this chapter
do not apply to the year 2001 tax roll and
thereafter.
SECTION 2. This
act shall take effect upon passage.
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LC01713/SUB
A
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