Arizona Taxpayers Get Hit with New Vehicle License Tax

Arizona Taxpayers Get Hit with New Vehicle License Tax

Lawmakers can’t say they weren’t warned.  Last year, when the Arizona legislature proposed giving their taxing authority away to the Director of the Arizona Department of Transportation (ADOT), we fought hard to stop what the Club considered one of the worst pieces of legislation in recent history.

Now those chickens have come home to roost.

At the beginning of the month, ADOT decreed they will be imposing a $32 license tax on every privately owned registered vehicle in the state of Arizona.  The new fee is 50 percent higher than what was estimated when the tax increase was being debated last spring.  The fee is supposedly set at the value necessary to fund Highway Patrol, which was previously paid for through the gas tax, VLT revenues and the state general fund.

Why is the fee much higher than originally thought? After the ADOT Director was granted unilateral authority to set the fee, the budget to fund Highway Patrol came in $37 Million higher than originally estimated.  They also discovered that they were poor at counting cars and that the pool of taxable vehicles was smaller than originally thought.  The result: an $185 Million-dollar tax increase.

Now many lawmakers who voted for the bill are outraged by the Director’s audacity to levy a tax that is higher than they believe it should be.  What did they expect? This is what happens when you farm out core governmental functions to bureaucrats. They empowered the Director to enact the tax and now lawmakers  are upset that he is doing exactly what they told him to do.

This likely won’t be the only sting taxpayers feel from the new car tax if it is not repealed. Nothing in the law precludes the ADOT director from raising this fee every year.  There are no controls in place to stop bloated budgeting or gaming the numbers to generate revenue for other purposes.  Nothing to stop this fee from being assessed arbitrarily, making it higher for certain types of vehicles i.e. imposing a “climate change” tax for gas guzzlers. And no protections exist for low-income individuals who are less able to afford the fee.

Policymakers thought that by handing off fee authority to the ADOT director that they could quietly raise taxes without having to take responsibility for the new fee.  They were wrong.

Voters know a tax when they see one, and they won’t be very sympathetic to bureaucrat-blaming or assertions that this is a user fee. They will be further incensed by the sneaky maneuvers used to skirt the constitutional requirement of a 2/3 majority vote to enact a new tax.

Hopefully the same lawmakers that are having buyer’s remorse will do the right thing and repeal this absurd tax from the books.