Will Smithfield follow Isle of Wight’s lead and cut car tax?
Published 7:02 pm Tuesday, April 5, 2022
Will Smithfield follow Isle of Wight County’s lead and reduce its car tax in light of a sharp rise in the value of used vehicles?
Isle of Wight supervisors voted in March to cut the county’s tax rate by 60 cents to $3.90 per $100 of assessed value. Had the tax remained at last year’s rate of $4.50 per $100, half of all county residents with 2013-2017 model cars would have seen increases of 42% or more on their April tax bills, according to Gerald Gwaltney, the county’s commissioner of the revenue.
A nationwide drop in new and used vehicle inventories, spurred by the economic impacts of the COVID-19 pandemic and a shortage of the computer chips needed to run newer cars, has triggered inflated vehicle prices and tax valuations, Gwaltney said, and the issue isn’t limited to any particular year, make or model vehicle. Drivers of pickup trucks, he said, will see the biggest impacts.
Smithfield drivers currently pay an extra $1 per $100 on top of the county’s rate to the town. Gwaltney, speaking to Smithfield’s Town Council during its March 28 committee meetings, estimated half of all Smithfield drivers with 2018-20 vehicles would find themselves paying an extra $73 or more in taxes just to the town this year, in the event Smithfield doesn’t change its tax rate.
Leaving Smithfield’s tax rate as-is would bring in an extra $335,000 beyond what the town collected last year in car taxes, Gwaltney said.
Councilwoman Valerie Butler, however, made a case for doing exactly that. Earlier that afternoon, she and her fellow council members had discussed the preliminary results of a compensation study they commissioned last fall.
The study indicates the town’s entry-level salaries are 8.5% below the public sector market minimum. The study compared 15 Virginia localities, among them Suffolk, Virginia Beach, Emporia, Isle of Wight County and the town of Windsor.
“Where’s that money going to come from?” she asked.
Since 2006, the town has received a fixed amount of $240,795 from the state to provide its residents with car tax relief. In 2021, Smithfield was able to use that money to give every town driver whose vehicle is registered for personal use a 39% tax reduction on the first $20,000 of his or her vehicle’s assessed value. But with the rise in vehicle valuations, the fixed amount won’t go as far this year.