Another complication has surfaced in the Personal Property Tax Relief Act of 1998: dealing with people who lease their cars. The aim of the tax is to provide relief for individuals, not leasing companies. But sorting out ownership can get very complicated.
Writes Jessica Kitchin with the Charlottesville Daily Progress:
Initially when Virginia passed the Personal Property Tax Relief Act of 1998, those who leased vehicles were ineligible to receive the tax break from the state. The state eventually opened the door for leasers to get tax relief, but that move opened up a world of complication for localities.
“It gets down to being able to really know who that owner is, and who is using that vehicle,” said Robert Walters, chief of administration taxation at Albemarle County. “You need some kind of identifier. We need to make sure we’re dealing with the right people.”
That means county officials need to verify who owns what. Then the county reimburses the leasing company, which reimburses the owner. The situation can get incredibly confusing, and Albemarle County is calling for state legislation to simplilfy the process.
Relief for the car tax was a worthy idea — state spending was out of control during the go-go yeras of the 1990s, and taxpayers deserved to get some of their money back. But it’s increasingly apparent that the idea of getting the state entangled in a local tax is not working. Furthermore, the General Assembly isn’t even living up to the original deal: It capped state payments to localities, and the tax on the first $20,000 in value will never be fully phased out as promised. Taxpayers are getting short-changed, and the state is causing headaches for localities administering the tax.
The General Assembly should scrap the entire Rube Goldberg arrangement — let localities set their own rules for the personal property tax — and apply the proceeds towards a reduction in the state sales or income tax.
