Money & the Law: Renew your car registration document? Here’s what you pay for – and where it goes | Business

I recently renewed the registration of a motor vehicle and was reminded that this process requires the payment of a fee which falls into two basic parts: the specific property tax and, finally, everything else, grouped under the heading “registration fees”.

So what is the specific property tax and how is it calculated? This is a personal property tax mandated by a section of the Colorado Constitution (Art. X, Sec. 6 for purists) that dates back to 1937. Tax revenues are shared by various government units local based on factory fees. The tax is paid when a vehicle is first registered and annually thereafter.

The tax is based on the “taxable value” of the vehicle, which is 85% of the manufacturer’s suggested retail price, without options, and not on what was paid by a buyer. Once the assessed value is established, it never changes. What changes is the tax rate. During the first year of service of the vehicle, the rate is 2.1%. The rate then drops to 1.5% for the second year of service, 1.2% for the third year and 0.9% for the fourth year. For years five to nine, the rate is 0.45%.

After that, the tax is set at $ 3 regardless of the original value of the vehicle. That’s true for Yugos and Ferraris, and everything in between – and, I might add, creates an incentive for people to drive older, more polluting vehicles. (By the way, does anyone remember the 2009 federal “money for bullshit” program to save the auto industry from the Great Recession and remove older, more polluting vehicles? of the road ?)

As a background for the specific property tax, in 2010 there was an element of tax reduction on the November ballot – Proposition 101 – which, among other things, would have reduced the specific tax on property. ownership over four years at $ 2 for new vehicles and $ 1 for used vehicles, regardless of the value of the vehicle. (Proposition 101 would also have exempted the first $ 10,000 of the purchase price of a vehicle from sales tax.) Proposition 101 would have hit local governments hard at a time when they were struggling to make ends meet. and she was beaten up.

The amount of the registration fee / everything else you pay when you renew a vehicle registration is based on the type and weight of a vehicle, not its value, and that doesn’t change, well as the amount of fees you pay changes based on various government requirements and needs. As of 2018, the registration fee has been itemized for you when you receive your new registration certificate and there you will see that money spread over many buckets including a base fee bucket, a bucket safety bridge, an emergency medical services bucket, a motorist insurance database bucket, a road safety bucket, and a standard peace officer training bucket. Oh, and 22 cents will cover the cost of the tab you put on your license plate.

The breakdown of registration fees occurred as part of an aggressive, multi-pronged, ongoing and badly needed modernization of systems for controlling driver’s licenses, title issuance and registration. cars. This initiative began in 2014 and is called Colorado DRIVES, an acronym for “Drivers License, Record, Identification and Vehicle Enterprise Solution”. You can read all about it on the Motor Vehicle Division website, dmv.colorado.gov.

Jim Flynn works for Flynn & Wright LLC of Colorado Springs. You can contact him at [email protected]


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