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Car tags increase not too costly
Published Thursday, July 9, 2009
By Brant Sappington
Staff Writer
Despite fears of significant rise in the cost of car tags in the state, most Mississippians will see little or no increase due to action taken late in the legislative session.
Alcorn County Tax Collector Greg Younger said there was a great deal of concern the legislative tag credit would be lost all together if the state legislature did not take steps to rebuild the fund used to provide the credit, but new legislation has created a slightly reduced credit that will now apply to tag purchases in the state.
The Motor Vehicle Ad Valorem Tax Reduction Act was originally passed during the 1994 legislative session, going into effect in January 1995. The law raised the sales tax on automobiles from 3 percent to 5 percent and placed the money into a fund used to offset the cost of tags and tag renewals by providing a “legislative tag credit” which is passed on to the purchaser by the local tax collector.
Younger said prior to July 1 of this year the credit had been set at 5.5 percent of the cost of the tag. Due to a shortage in the fund used to provide the credit, the Mississippi Tax Commission had proposed reducing the credit to 3 percent if the legislature did not take action to replenish the fund.
During the most recently completed legislative session, a bill was approved that provides the tag credit at the reduced rate of 4.25 percent, a reduction from the previous rate of 1.25 percent.
“It’s not nearly as bad as it could have been,” said Younger.
He said most people will not see any increase in the cost of their tag renewal because the annual depreciation in the assessed value of their vehicle will offset the slight increase in the tag price due to the decrease in the credit.
Owners of vehicles older than 10 years old, whose depreciation has bottomed out under the law, will see an increase of $1.25 due to the decreased credit.
He said he expects only owners or purchasers of extremely expensive vehicles will see a noticeable jump in the cost of their tags.
Recent action by the Alcorn County Board of Supervisors and the Corinth Board of Aldermen has also cleared the way for another new tag credit. A law approved the state legislature allows cities and counties to provide a one-time credit toward the ad valorem tax portion of the car tag to active duty members of the military.
Younger said both local boards had approved the credits. Military members currently on active duty, or the spouses of those members, can receive a one-time credit of up to $100 toward the county tax and $50 toward the city tax on a single vehicle. The legislature did not
include a provision for a credit toward the school taxes.
The tax collector said the credit will make the biggest difference for those with newer or more expensive vehicles. The law defines an active duty service member as a Mississippi resident who is a member of the Mississippi National Guard or the U.S. Armed Forces or a reserve armed forces or National Guard unit who is currently serving on active duty in Afghanistan or Iraq. The credit is available through Sept. 30, 2012.
