In March, Virginia Governor Glenn Youngkin signed a law giving local governments the power to cut car taxes “to prevent huge tax hikes driven by dramatic increases in used vehicle values.”
In Richmond County, an early estimate suggests vehicle values will be up 12% on average but some people could see increases up to 20%, according to the county administrator in a News On The Neck article.
“With prices soaring on the necessities that families and individuals use every day, Virginians are in dire need of relief to their wallets. I am proud to sign this legislation and work with the General Assembly to empower localities to lower the cost of living,” Governor Youngkin said via press release. “Many Virginians are struggling due to rising prices. Now it is up to local leaders across Virginia to step up and fight inflation with real tax relief,” he added.
Richmond County is one of the localities that wants to do something to offer its people some relief, but county administrator Morgan Quicke doesn’t think cutting taxes is the right move, according to the News On The Neck article. So, the county is considering a work-around that will have a similar impact.
Instead of cutting the tax rate, Richmond County is proposing to increase the Car Tax Credit from 45% to 50% this year. According to Quicke, estimates indicate hiking the credit will help to offset between $275,000 - $300,000 of taxes that taxpayers would otherwise owe.
Increasing the Car Tax Credit allows the county to offer relief on a temporary basis. If the current conditions persist or get worse, the county can consider doing so again, but it isn’t stuck with a permanent change like a tax rate cut.
Richmond County is also facing inflation, and there’s a chance that a lower car tax rate might not be sustainable, the county administrator explained to News On The Neck.
“We feel that this measure is effectively doing the same thing as lowering the rate for the purposes of what our citizens will pay in 2022, but since we expect vehicles to lower in value in the years to come, we would be forced to raise the tax rate back to existing levels should we have chosen to lower it this year,” he said.