Senate lowers motor vehicle excise tax valuation for cars and small trucks

OLYMPIA – When voters approved Initiative 776, which repealed state laws governing the valuation of vehicles, they created a two-pronged problem. First, jurisdictions that impose a motor vehicle excise tax had no option but to continue to follow the repealed statutes to retire existing debt. Second, other local jurisdictions that have the option of imposing an MVET in local, voter-approved transportation plans have no guidance on vehicle valuation or rates of depreciation.

Those problems will be solved by legislation passed unanimously today by the Senate that establishes new guidelines for vehicle valuation and depreciation. Jurisdictions with existing debt may choose the repealed statute or the new statute; jurisdictions that launch new plans must follow the new statute.

“This is a much more fair way to gauge vehicle value,” said Sen. Mary Margaret Haugen, D-Camano Island, who sponsored Senate Bill 6247. “No longer will a car be valued at 100 percent of Manufacturer’s Suggested Retail Price (MSRP). It will instead be valued at 85 percent of MSRP and depreciated based on localized, average retail value versus an arbitrary tax table .”

The 85-percent formula was selected because it represents the average actual purchase price of most new vehicles. It applies to cars and small trucks, with depreciation based on the average western-region market depreciation for vehicles in that class.

The base value for medium and heavy trucks, meanwhile, will be the latest purchase price, with depreciation based on average annual national market depreciation for that class.

The bill also requires that if contracted to administer the tax, the Department of Licensing may charge local jurisdictions a “reasonable amount” not to exceed 1 percent of tax collections for the administration and collection of the tax, meaning all administrative costs are borne entirely by the taxing district.

SB 6247 passed unanimously and awaits consideration in the House of Representatives.

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