IW reduces car tax
Published 12:32 pm Friday, March 4, 2022
Isle of Wight’s Board of Supervisors voted unanimously on March 3 to lower the county’s personal property tax rate just over 13%.
Gerald Gwaltney, the county’s commissioner of the revenue, had recommended in February that the supervisors consider a reduction of 20 cents per $100 of assessed value in light of a sharp rise in the value of used vehicles, but then upped his recommendation to 60 cents.
According to County Administrator Randy Keaton, the county saw a nearly $2 million increase in personal property tax revenues in 2021. The 13% reduction would still result in the county collecting roughly $2 million more than its 2021 revenue from personal property taxes, Keaton said.
When the county sends out car tax bills in April, they’ll reflect the new rate of $3.90 per $100 of assessed value. Had the rate remained at $4.50 per $100, the county would have received an extra $4 million in tax revenue.
New vehicle inventory is down due to COVID-19 cases among the automotive manufacturing workforce, Gwaltney had told the board in February. The decline in travel over the past two years of the pandemic has also resulted in fewer used vehicles entering the market, since there’s less need to replace them. That, coupled with a shortage of computer chips needed to run newer cars, means vehicle values are on the rise.
Drivers of 2013-2017 model vehicles would have been particularly affected, Gwaltney said. Roughly half would have seen a 42% or higher increase on their April tax bills.
“We’re referring to this as a temporary rate adjustment; it’s not a tax cut,” Keaton said.
He cautioned that once vehicle values come back down to a more normal level, the board may need to consider raising the tax rate again.
No one spoke during the public hearing the county scheduled at its March 3 meeting.
“This is a reflection of our board’s commitment to keep taxes down,” said Supervisor Don Rosie.
The county will also offer a 35% tax rebate to drivers of non-business vehicles.
Since 2006, the county has received a fixed $5.1 million from the state every year to provide its residents with car tax relief. In 2021, the county was able to use that money to give every Isle of Wight driver whose vehicle is registered for personal use a 40% tax reduction the first $20,000 of his or her vehicle’s assessed value. But with the rise in vehicle valuations, the money won’t go as far this year.