YARMOUTH — The Town Council last week unanimously opposed Question 2 on the statewide referendum ballot, which would reduce the motor vehicle excise tax and provide tax exemptions for owning or buying new energy-efficient vehicles.
In a letter to The Forecaster, councilors said passage of the referendum will result in property tax increases, cuts in municipal services and decreases in road maintenance and improvements.
Question 2 asks if voters “want to cut the rate of the municipal excise tax by an average of 55 percent on motor vehicles less than six years old and exempt hybrid and other alternative-energy and highly fuel-efficient motor vehicles from sales tax and three years of excise tax?”
Council Chairman Mark Hough said while it may sound appealing to eliminate the tax, the outcome will result in financial hardships to the town and the state, and an increased property tax burden.
“People don’t want to pay an excise tax, but they want nice roads,” he said. “It is difficult to have it both ways.”
According to Town Manager Nat Tupper, Yarmouth budgets $1.5 million a year from excise tax revenue for road and sidewalk repair and maintenance. He said the money is used for paving projects, sidewalk repair, maintenance, equipment and labor. If the referendum passes, he said, Yarmouth will lose at least $600,000 in revenue. Based on insufficient data regarding how many hybrids and fuel efficient cars are on the road, Tupper said he expects the loss to be larger than $600,000 annually.
In order to compensate for lost revenue, Tupper said town property taxes would have to be increased by 2.2 percent, or an additional 43 cents per $1,000 of assessed value. Cuts to services may be inevitable and road maintenance will suffer, he said.
In addition to the loss of revenue, Hough said the second half of the referendum, which allows hybrid cars a three-year pass on excise taxes and an exemption from sales tax, is unfair to residents who cannot afford new cars.
“Not only is the three-year exemption a blow to the town budget, the sales tax exemption is a shortfall to the state,” he said. “The complete tax break for hybrid vehicles is just too much.”
The state is expected to lose about $200 million in revenue from the hybrid vehicle sales tax exemption.
Vice Chairman Jeff Darrell said residents need to understand the implications of the referendum before they vote.
“Tax relief is easy to say yes to, but the outcome will affect roads, jobs and property taxes,” he said. “The financial burden will fall to a more financially stressed group of people, and the benefits will go to those who can afford it.”
Question 2 will benefit those who can afford to buy a new car every three years, Darrell said, and those who cannot must absorb their excise tax burden.
Darrell also said the paving program has been pushed back for a few years in order to keep property taxes low, but road maintenance and improvements to infrastructure need to be priorities.
“We need to keep the roads as safe and passable as possible,” he said. “And the revenue collected from excise tax accomplishes that goal.”
Election Day is Tuesday, Nov. 3, at the Amvets Hall, 148 North Road from 7 a.m. to 8 p.m.
Amy Anderson can be reached at 781-3661 ext. 110 or firstname.lastname@example.org