This is a statement from Chesterfield County Commissioner of the Revenue Jenefer Hughes regarding the increase in vehicle tax bills from 2021 to 2022.
The Commissioner of the Revenue is a constitutional officer who is elected and operates independently of the Board of Supervisors and County Administrator.
“Most Chesterfield County citizens are seeing an increase in personal property tax bills in 2022.
The reason is the dramatic increase in used car prices. As the global economy recovers from the COVID pandemic, supply chain issues continue to affect new car manufacturing, which in turn has escalated demand for used cars, particularly those purchased in the last 5 years. This means it is not uncommon to see vehicles valued at more than the purchase price.
It’s important to understand the economic dynamics in the used car market to contextualize the personal property increase. The Commissioner of the Revenue is responsible for assessing personal property taxes (VA Code Sec 58.1-3100-3123.1). My office has used the same assessment methodology for at least 35 years. I have explained this below.
VA Constitution Article X, Sec 2 requires assessment of personal property at Fair Market Value. VA Code Sec 58.1-3503(3) then directs the use of a “recognized pricing guide” for valuation at retail, trade-in or loan value. The JD Power Used Car Guide for the Eastern Region is considered the “recognized pricing guide” by the Commissioner of the Revenue Association, and all localities use it for vehicle assessment purposes. The JD Power valuations are based on objective market analytics, which includes the current price of vehicles. We live in a free market economy, and vehicle prices are affected by free market dynamics. When there are supply issues and demand is high, prices go up until supply matches or exceeds demand. When the economy is operating “normally”, vehicle prices will decrease and so will your vehicle tax bill. At this time, we don’t have enough information to predict when that will happen.
At the end of January, my office performs a mass valuation of over 400,000 vehicles in our system, and then sends a Return of Tangible Personal Property to every vehicle owner notifying them of their vehicle’s assessment. The Personal Property Return included a newsletter that highlighted the fact that vehicle assessments were likely to increase this year, as they did last year. Starting in Fall 2022, the Commissioner of the Revenue’s office will launch an online taxpayer portal, which will make it much easier for citizens to access their vehicle assessment data.
In 2022, the total vehicle assessment resulted in $22 million more tax revenue than in 2021. The Board of Supervisors received this information the day after the mass valuation was completed, to give them time to consider their options. They recognized this was a result of a disruption in the economy and focused on strategies to mitigate the tax increase this year. They chose to send back the entire amount of the tax increase to citizens, in two ways:
- Leverage the Car Tax Relief legislation signed by Gov. Gilmore, to provide relief on vehicles driven for personal use. This year, the Board of Supervisors voted to increase the percentage tax relieved to 55%, which is unusual. Typically, this percentage trends down, because the county receives a fixed $41 million, which is applied to a growing number of vehicles, reflecting the county’s population increase (around 43% would be normal). The legislation, however, only allows this relief up to $20,000 of a vehicle’s value, so a maximum of $389. This maximum threshold has not been revised since the legislation was signed. The actual cost to the county for this tax relief was $23 million.
- Cut the Vehicle License Tax by 50%, to $20. This measure cost the county over $7 million.
In total, the county returned $30 million to taxpayers to mitigate the increase in personal property tax assessments. They did the right thing.
Taxpayers have the right to appeal an assessment at any time, per VA Code Sec 58.1-3980. There are instructions at chesterfield.gov/comrev to appeal. Every appeal is reviewed and considered, and the taxpayer will receive a response. However, the onus is on the taxpayer to prove the assessment is incorrect.
We are living through unusual economic conditions. Inflation is up and prices for goods and services are increasing, which had a direct impact on your real estate and vehicle taxes. At least with real estate, you expect the investment in your home, and therefore your real estate taxes to increase. You buy a vehicle, expecting it to depreciate as it gets used, and therefore to decrease in value. Unfortunately, the law requires a different valuation method, which in 2022 resulted in an increase in vehicle tax assessments.”
For more information or to contact the Commissioner of the Revenue, visit the Commissioner of the Revenue webpage, call 804-748-1281 or email cor@chesterfield.gov.