Money & the Law: Renewing your car registration? Here's what you pay - and where it goes - Colorado Springs Gazette
I recently renewed the registration of a motor vehicle and was reminded this process requires payment of charges that come in two basic parts — specific ownership tax and, well, everything else, lumped together under the heading “registration fees.”
So what is the specific ownership tax and how is it calculated? It’s a personal property tax mandated by a section of the Colorado Constitution (Art. X, Sec. 6 for purists) that goes all the way back to 1937. Revenue from the tax is shared by various local units of government based on mill levies. The tax is paid when you first register a vehicle and annually thereafter.
The tax is based on the vehicle’s “taxable value,” which is 85% of the manufacturer’s suggested retail price, without options, and not what was paid by a purchaser. Once the taxable value is established, it never changes. What does change is the tax rate. During the vehicle’s first year of service, the rate is 2.1%. The rate then goes down to 1.5% for the second year of service, 1.2% for the third year and 0.9% for the fourth year. For years five through nine, the rate is 0.45%.
After that, the tax is fixed at $3, regardless of the vehicle’s original value. This is true for Yugos and Ferraris, and everything in between — and, I might add, creates an incentive for people to drive older and more polluting vehicles. (As an aside, does anyone remember the 2009 federal “cash for clunkers” program intended to rescue the auto industry from the Great Recession and get older and more polluting vehicles off the road?)
By way of history concerning the specific ownership tax, back in 2010, there was a tax reduction item on the November ballot — Proposition 101 — which, among other things, would have reduced the specific ownership tax over four years to $2 for new vehicles and $1 for used vehicles, regardless of vehicle value. (Proposition 101 would also have exempted the first $10,000 of a vehicle’s purchase price from sales tax.) Proposition 101 would have hit local governments hard at a time when they were struggling to make ends meet and it was soundly defeated.
The registration fees/everything else amount you pay when you renew a vehicle registration is based on a vehicle’s type and weight, not its value, and this doesn’t change, although the amount of fees you pay will change based on various governmental wants and needs. Beginning in 2018, registration fees have been itemized for you when you receive your new registration certificate and, there, you will see this money gets sprinkled into many buckets, including a base fee bucket, a bridge safety bucket, an emergency medical services bucket, a motorist insurance data base bucket, a road safety bucket and a peace officer standardized training bucket. Oh, and 22 cents goes to cover the cost of the tab you affix to your license plate.
The itemization of registration fees has come about as part of an aggressive, multipronged, ongoing and sorely needed modernization of the systems that control drivers licenses and vehicle titling and registration. This initiative began in 2014 and goes by the name Colorado DRIVES, an acronym for “Drivers License, Record, Identification and Vehicle Enterprise Solution.” You can read all about it at the Division of Motor Vehicles’ website, dmv.colorado.gov.
Jim Flynn is with the Colorado Springs firm of Flynn & Wright LLC. You can contact him at [email protected].
source: https://gazette.com/business/money-the-law-renewing-your-car-registration-heres-what-you-pay---and-where/article_c2d92098-35dc-11ec-ac2c-e3365e94b319.html
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