Turn Up the Heat to Kill the Car Tax

The same month that Californians celebrate the 20th anniversary of Proposition 13, the Legislature will adopt a new state budget that breaks all previous spending records, driven by an explosion of new revenues. Yet this year's budget debate also offers the opportunity for another Proposition 13-sized taxpayer revolt. In all probability, Californians will have two choices: Abolish the abusive and hated $4-billion car tax this year, or live with it for another generation.

The personal property tax of the 1930s was particularly obnoxious. Each year, a county assessor would come to your door, inspect your personal possessions and then tell you how much you had to pay for the privilege of keeping them. The officials often were frustrated to find that on the day they came to call, they could find the refrigerator, the sofa and the family radio, but nobody seemed to own a car.

Thus the car tax was born as an "in-lieu" personal property tax in 1935. Instead of requiring an annual assessment, it is paid through the Department of Motor Vehicles.

California's personal property tax was abolished in the 1940s, but a half-century later, the car tax remains as the last vestige of this long-ago abandoned system. Now called the vehicle license fee, it comprises virtually the entire amount that Californians pay to register their cars every year. Although originally intended to pay for local streets and roads, today it is all lumped into general spending by local and county governments.

This year, voter rebellions in Virginia, South Carolina, Utah, Georgia, Texas, Washington and Arizona are driving legislation to end car taxes. Meanwhile in California, a similar proposal is pending in the Assembly Revenue and Taxation Committee, its fate depending on whether Californians speak as clearly to their Legislature as have residents of those other states.

The California motorist bears the third heaviest taxes in the country on an average car. Overall, California taxpayers are paying about $3.6 billion more in state taxes than they would have if tax rates were simply restored to their 1991 level. That year, Californians suffered the biggest tax increase ever levied by a state in American history, including a hefty hike in the car tax, averaging $60 per vehicle. At the time, taxpayers were assured that this was a "temporary" measure just to get the government through the recession.