The State Tax Commission is gearing up for a second attempt to change the way vehicle fees are assessed, trading in the little blue book for standardized depreciation.
The proposal was killed last year by what officials characterize as a "basic misunderstanding" and public controversy, but officials say it's been retooled to address concerns."This plan is different than last year's because it separates vehicles into different depreciation schedules rather than lumping them all into one," said Tax Commission spokeswoman Janice Perry.
Currently, the tax value of most vehicles in Utah is based on the National Automobile Dealers Association Guide, which reflects individual changes in the value of every vehicle every year.
Under the proposed "depreciated cost new approach," values would be entered only once, when the vehicle is new, and then depreciated annually according to a set schedule.
Perry said that unlike last year's single-schedule system, the new plan calls for three schedules, covering domestic vehicles, foreign vehicles, and light trucks, minivans and utility vehicles.
After being briefed on the proposal this week, Salt Lake County Commissioner Brent Overson, a former deputy assessor, said he is not entirely convinced that the new plan solves the problems of the old one.
"The big controversy last year was that the schedule appeared to shift taxes from luxury cars to lower-priced cars," Overson said. "I'm not sure they've solved that by going to the three schedules."
For example, while a Ford Escort will no longer be included in the same depreciation schedule as a Mercedes, it will be in the same schedule as a Cadillac, Overson said. Also, he worries that the depreciation system will result in more tax appeals from owners who will rely on the NADA book for proof of values.
However, Tax Commission officials and assessors say the new approach solves more problems than it creates.
The current system is a "tedious process subject to a lot of error," said Deputy Salt Lake County Assessor Eleanor Lee Brennan. "We have to start from scratch every year."
While conceding that the NADA Guide is probably a more accurate reflection of vehicle values, Brennan said the depreciation approach is an acceptable and much more efficient method. "To the extent that you can rely on statistical analysis, it is reliable," she added.
Perry said the depreciation schedules are based on average trade-in values as well as extensive statistical information culled from Division of Motor Vehicles files. The state already uses depreciation formulas to establish the values of 300,000 snowmobiles, motor homes, ATVs, boats and motorcycles.
In his announcement of the proposed change, Tax Commission Chairman Val Oveson said the new approach wouldn't significantly affect tax revenue.
"In fact, the overall revenue collected statewide will decline slightly," he said, estimating the decrease at $40,000 out of the $60 million collected.
One of the biggest selling points of the new system is that it would pave the way for automated vehicle registration renewal at grocery stores, shopping malls, auto shops and other locations, Oveson said.
However, Brennan said the change could affect the fees on individual vehicle owners. "Some will go up, some down," she said.
County assessors prefer the depreciation process, she said, noting that Utah is one of only a few states still using NADA.
"We are interested in seeing this approach become a reality," Brennan told the County Commission this week. "The attempt to change to this methodology last year failed because of some basic misunderstanding. The plan is to do a much better job of informing the public."
Public comment on the proposed change will be accepted through Sept. 15. Perry said if the Tax Commission adopts the change it will take effect Jan. 1.
Estimated taxes in 1995
Current system New proposal
1987 Chevy Nova $28.05 $8.50
1990 New Yorker $108.80 $101.46
1989 Chevy Celebrity $51.43 $55.46
1991 Ford Escort $73.95 $68.06
1990 Ford Taurus $74.46 $85.89
1988 Toyota Camry $82.03 $66.68
1992 Toyota Corolla $119.00 $110.94
1992 Honda Accord $194.65 $167.58
1989 Acura Integra $104.55 $81.04
1987 BMW 325 $108.80 $103.18
1992 Geo Metro $82.88 $109.00
1987 Jeep Wagoneer $100.30 $106.50