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Mayor: One-time tax relief proposed for car owners in Alexandria

This year’s budget could include a one-time measure meant to keep the vehicle tax from skyrocketing.

In his monthly newsletter. Mayor Justin Wilson outlined a unique set of circumstances that, if left unchecked, could see Alexandrians’ vehicle personal property tax skyrocket.

“Alexandria’s second-largest General Fund revenue is the vehicle personal property tax,” Wilson said. “As a local tax assessed on vehicle owners annually, based on an assessed value, there is perhaps no tax more hated in the Commonwealth of Virginia.”

Wilson said in Fiscal Year 2021, the city collected $36.5 million from vehicle owners to provide for a total of $60 million of total general fund revenue.

The tax on vehicle is generally fairly steady, but Wilson said changes in the vehicle market has caused that value to increase dramatically and, with it, the associated vehicle personal property tax.

According to Wilson:

Now, the City Council is grappling with a challenging aberration in this revenue source. Under normal circumstances, the valuations of vehicles do not increase. In 2018 and 2019, only about 1% of Alexandria’s registered vehicles increased in value.

Yet, the pandemic has caused chaos in the used car market place. Last year, many Alexandrians saw increases in the value of their cars. This year, this phenomenon was projected to continue, as the City Manager’s proposed budget assumed an 8.5% increase in revenues.

Wilson said the current estimates are that vehicle values would increase by an average of 26% for 87% of the vehicles in Alexandria.

“This is extraordinary,” Wilson said. “To protect taxpayers, the City Manager has brought to the Council a proposal for one-time relief for vehicle owners.”

The proposal from City Manager Jim Parajon would have the city assess only 77% of the Fair Market Value of vehicles to counter-balance the Covid related upswing in value. The proposal would provide no 2022 tax for vehicles assessed at $5,000 or less, and cars valued higher would still have a smaller amount of relief from the tax.

“This proposal provides all vehicle owners with tax relief, while reserving the greatest relief to vehicles with the lowest valuations,” Wilson said. “It is hopeful that the used car market will get back to normal next year. Council will determine their approach to this proposal later this month.”

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