Californians pay the third highest combination of automobile taxes in the nation, and they pay $3.6 billion more in overall taxes than they would have without the net tax increases of the 1990's. The largest portion of the automobile taxes is the Vehicle License Fee, also called the "car tax," accounting for an average of $185 per automobile annually. None of this money is used for highways or highway-related services. It goes instead to local government general funds and local health and social services programs.
Abolishing California's car tax would make California families whole for the massive tax increases they suffered in 1991. In this period of economic growth, abolition of the car tax could be done while protecting local government from any revenue loss, preserving state funding for schools and prisons, and maintaining the proposed budget reserve. It would require an overall reduction in the 1998-99 proposed general fund budget of just 9/10ths of one percent, or no budget reductions at all if additional revenues materialize in the May Revise.
Virginia voters just delivered a resounding mandate for abolishing the car tax in that state by electing James Gilmore, who made that objective the signature theme of his campaign. The support for abolishing the car tax from an impressive coalition of taxpayer groups suggests that strong organizational structure exists for taxpayers to channel their outrage at California’s abusive car tax.
Background
California's automobile owners are one of the most heavily taxed classes in our society. They pay state and federal excise taxes on gasoline, sales taxes on gasoline, sales taxes on vehicle purchases and even sales taxes on the excise taxes. They pay a variety of surcharges for call boxes, air quality management, abandoned vehicles, tire disposal and fluid disposal. They pay fees for driver's licenses and registration transfers. They pay higher prices for oxygenated gasoline, smog devices, electric car subsidies and safety gadgets. They pay for mandatory smog inspections and mandatory insurance, and are then taxed on the mandates. They pay tolls and traffic fines and surcharges on traffic fines.
And they pay one of the heaviest car taxes in the country, averaging more than $185 per vehicle per year. Californians rank third in the nation in overall motor vehicle taxes and eighth in vehicle license fees.
These taxes directly affect their ability to get to work, shop for their families, take their children to school, visit their loved ones, and generally to lead their lives.
The vehicle license fee is particularly egregious. Although the state Department of Motor Vehicles assures those registering their cars that a third of their fees go to highway-related services, the check actually written by the motorist goes almost entirely to local general funds for purposes unrelated to highways. In short, it is a deception created by lumping fees not paid by the motorist (primarily commercial weight fees), and implying that a sizeable percentage of the motorist's check is for highway-related services (which it is not).
