Saturday, February 21, 2009

Colorado Car Tax

Colorado SB09-108 has passed the House Transportation and Appropriations Committees (with a few minor changes related to ride sharing cars being charged the same owned cars rather than rental cars which have to pay an extra $2 a day and exemptions for some collectors’ cars).

We have a Democrat controlled House with 37 Democrats and 28 Republicans. It takes 33 votes to pass a bill. No Republicans have voted for the bill and in the Senate two Democrats voted against it.

This tax increase is being held out as job producing, job protecting and as an economic stimulus. What it is is a massive tax increase on citizens during a bad recession. If this passes, and it will, there will be an increase in vehicle registration of $41-$51 for most cars every year. There will be a new tolling authority that would allow tolling anywhere local governments want it. There will be a MBR (mileage base revenue) to institute a charge for how many miles you drive. There will be an additional $2 charge per day for rental cars.

I don't know about you... but, that sounds like it is going to have an impact on individuals that will supersede any relief soon to be coming from the federal government... which I think is going to be less than $15 a week for individuals in the "right" tax bracket.

What y'all got goin' on in your neck of the woods?


One Salient Oversight said...

Government spending creates jobs and helps boost the economy - that is undeniable. Taxes naturally need to be levied to fund government services.

But what is the intention of the tax? Is it to raise revenue or is it to discourage car use? By making cars more expensive to own and drive, such a measure is likely to reduce demand for cars regardless of its intention.

Raising taxes during a recession is always a tricky prospect and perhaps this bill shouldn't have been passed as a result. If it is accompanied by an increase in government spending (say in unemployment benefits or a state-wide stimulus package) then its negative effects will hopefully be countered by the positive effects of such spending.

If the intention is to reduce the use of motor vehicles than you need to ask:

a) What is the state government doing to provide for increased use of public transport or bicycles?

b) Why is it necessary for the government to financially benefit from something it is trying to discourage?

If the government is serious about reducing motor vehicle usage and not concerned at all about increased tax revenue, then they should make a cash withdrawl and then burn the cash.

BLBeamer said...

I have to differ with OSO here. Not all government spending creates jobs and helps boost the economy. If that were so, why was the Soviet Union's economy performing so poorly for so many years?

I am not denying that governments rightfully provide some services and need employees to do so. I also am not denying that jobs are sometimes created in the private sector by government spending, but I think it is much more debatable that these jobs therefore boost the economy.

What is undeniable is the economic law that when you tax something, you get less of it since the marginal cost of that item is increased.

So, when taxes are increased to pay for government created jobs, what unfortunately is rarely mentioned (because it is difficult to measure, perhaps) is the job creation in the private sector that was suppressed because of increased taxes.

Business cycle theory is not difficult to understand, but too lengthy to address here. Suffice it to say that government involvement in the economy is not always beneficial and often has a baleful effect. It commonly amplifies both the peaks and troughs of economic activity.

What should also be undeniable is that politicians have no business making economic decisions using political criteria, which, unfortunately is all they know, and is a recipe for likely disaster.

Coffee Bean said...

You make some excellent points OSO.

I think the tax is to raise more money for road maintenance/construction and to discourage car use at the same time. We already have a state gas tax that goes for the roads here.

The MBR is what really annoys me... well, and the tolling... not only will they have raised taxes they will also charge to drive on the roads the raise in taxes was to go for?

Here in Colorado the greatest concentration of people is along the I25 corridor which runs through the center of the state just east of the Rockies from north to south. Denver, by far, being the largest metropolitan area and where, no doubt, the majority of the monies gathered would be disbursed.

The MBR would definitely hurt those who drive for a living or who communute from outlying areas. They already have to pay more in gas (and therefore more state gas tax). It seems punitive to tax them even more.

Our weather is highly unpredictable and we can get nearly any kind any time of year. Dangerous hail storms are most common in the summer and can come on suddenly. There are a lot of environmentalists here and cycling is big when the weather permits. However, we deal with snow and ice regularly and you really should have a 4 wheel drive. Of course, many don't and those people are the ones that have their cars abandoned on the sides of the road, cause accidents or have to call into to work and stay home because of road conditions.

It's probably going to pass. There's not a chance our governor will veto it. So, I'm really just griping about it.