The city exempted commercial vehicles from its new motor vehicle registration tax after the Chamber of Commerce lobbied against the move for business reasons, chamber executive director Todd Saunders said. The exemption comes at a time when the business community is trying to repeal or change the current business personal property tax structure.
The city passed a new motor vehicle registration tax for noncommercial passenger vehicles to crack down on abandoned and junk vehicles. It takes effect Jan. 1, 2005. Non-commercial vehicles are subject to a $22 vehicle registration tax every two years.
Originally, commercial vehicles would have been subject to the tax in lieu of the current business personal property tax that owners pay. But the Chamber opposed the city's plan, Saunders said, because the new tax included an 8 percent state administration fee that would not be realized economically in Juneau. The business personal property tax is administered by the local municipality with no fee, Saunders explained.
In addition, Saunders said replacing the business personal property tax with a motor vehicle registration tax would remove the local business community's ability to modify the BPPT in the future.
Former Mayor Sally Smith created the Tax Depreciation Task Force in May 2002 to address business personal property tax issues after the business community complained about changes that affected the tax. In 2001, the city assessor changed the depreciation tables that increased the tax on the life of business-related equipment, task force member Bob Rehfeld said. The business community concluded the business personal property tax was unfair and sought change, he said.
The task force issued its final report to the Assembly Finance Committee in September, and wants the business personal property tax repealed. Barring a repeal, the task force is prepared to seek other methods of tax relief, the report said. To make up for revenue loss from a repeal, the task force estimates the city would need to charge $80 per vehicle per year, Rehfeld said. The repeal is justified, he said, because the city offers no added services in return for the BPPT. An across-the-board motor vehicle registration tax is a fairer method, he said, because the city provides road services in return.
City Manager Rod Swope could not be reached for comment Tuesday.
The problem with the city's original plan to charge a motor vehicle registration tax, Saunders said, was officials wanted to replace the business personal property tax on commercial vehicles with an motor vehicle registration tax. Business owners would see no tax break under the plan, he said. State law prohibits the city from collecting both taxes on commercial vehicles.
At the end of fiscal year 2001, the city collected $2.2 million in business personal property tax on property assessed at $208 million, about 4 percent of all tax receipts collected by the city, the task force report said.
The 2003 mill rate for the business personal property tax is 11.47 cents per $1,000 of assessed value, according to the report. The mill rate is the rate at which property owners are taxed. A 2003 piece of equipment assessed at $85,000 would be taxed $975.
Task Force members have a meeting scheduled for Dec. 11 with city Finance Director Craig Duncan to discuss the report, Rehfeld said.
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