Personal Property Tax Relief Act

1. Personal Property Tax Relief Act

2. Overview of Current Program

3. What is the Personal Property Tax Relief Act (PPTRA)? The 1998 General Assembly enacted the Personal Property Tax Relief Act, which provides relief from personal property taxes otherwise payable on the first $20,000 of value for qualifying vehicles.

4. What is a Qualified Vehicle? • Any passenger car, motorcycle, pickup or panel truck having a registered gross weight of less than 7,501 pounds. (Note: Motor homes, trailers and farm-use vehicles do not qualify for the program.)

5. The vehicle must be owned or leased by an individual and NOT used for business purposes. • Leased vehicles for personal (non-business) use qualify when the lessee is responsible for payment of the personal property tax by the terms of the lease agreement.

6. What is the amount of Tax Relief currently provided by the State? All qualified vehicles are eligible for tax relief. Owners of vehicles assessed at $1,000 or less receive 100% tax relief. Owners of vehicles assessed for more than $1,000 receive tax relief on the first $20,000 of assessed value based on the following percentages:

7. Tax Relief Percentages

8. 2004 General Assembly LegislationImpacting PPTRA

9. House Bill 5018ER The Commonwealth’s reimbursements to local governments for PPTRA on qualifying vehicles will be set at $950 million per year for tax years 2006 and beyond.

10. Senate Bill 5005ER • Each county’s, city’s, or town’s share of the $950 million shall be prorated based upon the actual payments to such locality for tax year 2005 and shall be paid by the Commonwealth over a 12-month period beginning July 2006.

11. For tax years 2006 and beyond, each locality receiving reimbursement from the Commonwealth shall provide personal property tax relief on qualifying vehicles as follows:

12. (A) The local governing body shall establish its general personal property tax rate (currently $3.50/$100), which shall be applied to that portion of the value for each qualifying vehicle in excess of $20,000;

13. (B) The local governing body shall also establish one or more reduced tax rates which shall be applied to that portion of the value for each qualifying vehicle which is below $20,000; and

14. (C) The revenue generated from these two sources (i.e., the taxes on qualifying vehicles both above and below $20,000), when combined with the Commonwealth’s fixed reimbursement, should then approximately equal the amount of revenue the locality would have received had the general tax rate been applied to 100% of the value on all qualifying vehicles.

15. Relevant Statistics

16. Total Vehicle Personal Property Revenuev. PPTRA Relief Millions (E) (E) (E) Calendar Year

17. Total # of Vehicles v. # of Vehicles on PPTRA Thousands (E) (E) (E) Calendar Year

18. Potential Impact of Legislation on Taxpayers

19. Conversion of the Current Formula for PPTRA Reimbursement into an Effective Tax Rate Assm’t ≤ $20K x $3.50/$100 General Tax Rate = Tax 70% PPTRA ($490 max.) *30% Taxpayer Portion *Note: This 30% residual balance x $3.50/$100 general tax rate = $1.05 effective tax rate (on portion of assessment ≤$20K).

20. Calculations for Mock Bill $35,000*.0350 = $1,225 Total Levy Breakdown $20,000*.0105 = $210 $15,000*.0350 = $525 Subtotal $735 Total Taxpayer Portion $20,000*.0245 = $490 PPTRA Reimbursement Grand Total $1,225

21. A qualified vehicle assessed at $35K $1.05 $1.15 $1.25 $1.34 Tax Rate < $20K + + + + Tax Rate ≥ $20K $3.50 $3.50 $3.50 $3.50

22. A qualified vehicle assessed at $15K Tax Rate < $20K $1.05 $1.15 $1.25 $1.34

23. A qualified vehicle assessed at $1K Tax Rate < $20K $1.05 $1.15 $1.25 $1.34

24. Issues of Concern

25. Explaining this new legislation to our citizens (including why the amount of tax relief now varies among the surrounding jurisdictions). Factors to consider include: * Population ** Rate of growth *** Value of vehicles

26. Determining the personal property tax rate(s) on an annual basis for the initial $20,000 of value relevant to qualified vehicles so that the County receives its appropriate amount of revenue.

27. Changing our computer system to accommodate multiple tax rates during the first year of implementing these revisions to the PPTRA program.

28. Producing new tax bills which address all of the issues enumerated above (as well as the billing of vehicles assessed at less than $1,000 which will no longer be fully reimbursed).

29. SAMPLE

30. $35,000*.0350 = $1,225 Total Levy Breakdown $20,000*.0115 = $230 $15,000*.0350 = $525 Subtotal $755 Total Taxpayer Portion $20,000*.0235 = $470 PPTRA Reimbursement Grand Total $1,225 Calculations for Mock Bill