Car Tax Exemption Proposal Could Cost Darien $2 Million

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Gov. Dannel Malloy's plan to exempt property taxes on cars worth less than $20,000 could end up costing Darien more than $2 million in revenue. Photo Credit: Casey Donahue, file

DARIEN, Conn. - A proposal by Gov. Dannel Malloy to exempt taxes for some cars could cost Darien more than $2 million in property tax revenue.

Malloy's proposal would exempt the first $20,000 of the assessed value of a car from being taxed by a town. Darien would lose about $1.7 million in revenue from not taxing cars under that amount, according to Finance Director Kate Buch. Reducing the rest of the cars' assessed values by $20,000 would take the total losses in tax revenue to more than $2 million.

Darien has17,712 vehicles, of which about 15,000 are passenger cars, according to the most recent Grand List. The average assessed value of a car is $12,892. About 11,000 cars are valued at less than $20,000, Buch said.

"How it's going to impact people depends on the value of your home, depends on the value of your cars," she said. "Some people will see reductions in their taxes, some people will see them just stay level, and for some people they will increase. What will happen is the commercial property owners and the personal property taxes will pick up a portion of what would be lost."

In a letter last week to municipal leaders, Malloy said the tax exemption would "eliminate much of the aggravation and paperwork from your local tax assessment and collections operation." Also, most communities "are fortunate if they collect 90 percent of car taxes" and that car taxes make up a small portion of the tax base, he said.

In the 2011-12 fiscal year, Darien's tax collection rate was 99.5 percent. Property taxes make up 93.3 percent of Darien's total General Fund.

Malloy's proposal includes a local option for towns to delay implementation until next year. Buch said she wouldn't recommend Darien put it in place this year.

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