Why does Massachusetts have a motor vehicle excise tax?
BOSTON — It's April in Massachusetts. Time for those annual rites of passage like watching flowers bloom in the Public Garden, cheering on marathon runners and paying the dreaded 'T' word.
"Just paid the excise tax, due at the end of March," said one parkgoer.
"That excise tax is brutal," added another.
The motor vehicle excise tax is a burden, no doubt, but why do we have it? And is there any chance it could go away?
Massachusetts is one of 27 states that charges residents just to own a vehicle. Basically, the tax is $25 for every $1000 of valuation, with other considerations.
Eileen McAnenny, of the Pioneer Institute, an independent local think tank, explains why we have it when others don't.
"Massachusetts tends to provide more social services and other services and have higher cost than many other states," she said. "So they look for a variety of sources of revenue and more sources of tax revenue than many other states".
It is a state tax, but cities and towns collect it.
Though many think it's used for streets and roads, transportation or other infrastructure, that's actually not the case. The money goes into the general fund, so every municipality can use it however it wants.
"It's a source of revenue for cities and towns, and next to real property tax it's probably their largest source of income," said McAnenny.
And it has been for some time. The tax was first collected in 1928, back when the Ford Model-A was the most popular car in America. Since then, the state has grown to depend on it almost as much as we depend on cars, so don't count on it going away.
"It's a headache that's not going away because cities and towns rely on it to provide services. I do think they'd replace it with some other form of taxation," explained McAnenny.
When tracking the revenue taken in for each city and town in the state, Boston took in almost $61,000,000 last year. Worcester took in $18,000,000, that's more than the combined budget of the Worcester Public Library and several departments, so there is utility there.
There are also exemptions and abatements to the tax.
Of course, you can forego it all together but that likely involves another T word – the MBTA.
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