Jon Coupal- Columnist
is an attorney and president of the Howard Jarvis Taxpayers
Association -- California's largest taxpayer organization with
offices in Los Angeles and Sacramento. [go to website]
Car Tax is the Squeaky Wheel
Vehicle License Fee is a Tax...
[Jon Coupal and Trevor Grimm] 10/1/03
a new ripple of anger sweeps across our state as one-twelfth
of California car owners open their bills from the Department
of Motor Vehicles and find that their car tax has been tripled.
one wants to take responsibility for this $4.5 billion tax
increase. State officials confuse the issue by talking about "triggers," prior
legislation and state deficits; but make no mistake -- Governor
Gray Davis signed the tax increase authorization in June and
it was implemented without the approval of the Legislature.
years, many drivers assumed that what they were paying
the state each year was to cover the cost of registering a
and that any additional funds went for roads and services
to the car-owning public.
But in fact,
the largest portion of most auto owners' bills is the Vehicle
License Fee (VLF), which
is used by the state
subsidize local services totally unrelated to automobiles,
such as mental health care. So while the VLF may incorporate
the word "fee" this
is a misnomer because this fee is actually a tax on vehicles.
most car owners, as they reach for their checkbooks,
arguments over the semantics of tax law may seem trivial,
but the outcome
can mean billions of dollars more or less to the motoring
Jarvis Taxpayers Association has filed a lawsuit challenging
the hike in the car tax, absent a two-thirds vote of
both houses of the Legislature. Under Proposition 13 (Article
13 A, et seq.,
of the California Constitution) "...any changes
in State taxes enacted for the purpose of increasing
by increased rates or changes in the method of computation
must be imposed by an Act passed by not less than two-thirds
members elected to each of the two houses of the Legislature."
with the VLF we are dealing with a self-described "fee," and
where, you ask, does the California Constitution
say that a "fee" increase
needs a two-thirds vote? Answer: Nowhere.
In a 1997
decision (Sinclair Paint Company vs. State Board
of Equalization) the California Supreme Court
a "fee" is
a charge collected in connection with governmental
regulatory activities -- such as a fee collected
to pay for the cost of
registering and licensing vehicles -- and is "OK" without
a vote, to the extent that such a "fee" does
not exceed the reasonable cost of providing the
services necessary to the
activity for which the fee is charged, and which
is not levied for unrelated revenue-raising purposes.
the regulatory activity of the Department of
Motor Vehicles in registering and licensing
the collection of more than four billion dollars
per year to be
raised by the VLF in its "hiked" form?
By their very complaints local bureaucrats make
clear that the money collected by the VLF will
related to the registration and licensing of
motor vehicles and that
it is nothing more than "unrelated revenue-raising." Therefore,
the VLF really is a car tax and subject to the
strictures of Prop. 13.
Jarvis Taxpayers Association has listened
to two justifications for the car tax increase
by state officials.
Arguments that the
VLF is a fee, or that, if it is a tax, it can
be increased without a two-thirds vote of the
the increase is
actually the elimination of a tax rebate, are
clearly self-serving and specious. The organization
takes the position
a successful outcome for taxpayers in the suit
to overturn the
car tax increase will not relieve the state
of its obligation to local government.
have asked for expedited consideration of their suit, many
car tax bills
may have been paid
there is a legal resolution.
In the meantime,
Gov. Davis has come to the realization that it was the car
hundreds of thousands
of additional signatures to put the recall
on the ballot. The heat is on and both
replacement candidate Lt.
Gov. Cruz Bustamante have come out strongly
against the car tax.
top officials now want to increase taxes on income and on tobacco
of the car tax.
should not require a two-thirds vote
as mandated by Proposition 13 because
they are not "raising" taxes
they are just "replacing" one
tax with another – this after they
claimed that the car tax increase wasn't
a tax in the first place. If this seems
and disingenuous on their part, welcome
to the world of Sacramento tax politics.
candidates have noted the unpopularity
of the car tax and come out against
it, but only two
State Senator Tom McClintock -- have
come out for its rollback without the
They say that
if Davis can raise the car tax with
a stroke of a pen, then
should be able to eliminate it just
If one of
these candidates wins the replacement race, taxpayers may not
have to wait
for the result of
a protracted legal
battle to achieve car tax relief.
with Schwarzenegger and
McClintock dividing the taxpayer
vote, the result could just as easily be
a Governor Cruz Bustamante who is
committed to raising taxes by another $8 billion,
or the maintenance
higher car tax if Davis is retained.
for now, taxpayers must cross their fingers and hope for
on the Jarvis
the overcharges already paid. If
this fails, it may require a grass
initiative effort to
the car tax
out of California.
information on how to establish a claim to
a refund on your Vehicle License
Fee, visit HJTA]
is president of the Howard Jarvis Taxpayers Association
and Trevor Grimm is general counsel.