July 10, 2008

Nebraska's Motor Vehicle Tax: Time for an Overhaul

 

Nebraska needs to overhaul its motor vehicle tax, according to the latest report from the Platte Institute for Economic Research. In a four-page report which was released Monday, June 23, recommendations are made to significantly change the amount citizens must pay when registering their vehicles and to change the way funds received from the tax are used.

Read the full report here: Download file Time for an Overhaul

In the report, the Platte Institute uses an example of a registering a 2007 Honda Odyssey in Nebraska and bordering states. The report shows that only Wyoming is more expensive than Nebraska. The report also points out the following: 

Ø  60 percent of the motor vehicle tax goes to education while none of the tax is specifically allocated to roads, even though we are facing a roads-funding conundrum.

Ø  Registering a 2007 Honda Odyssey in Lincoln will cost you roughly 10 times more than it would in South Dakota.

Ø  Bringing the cost of registering a vehicle in line with neighboring states will cut down on the number of illegally registered vehicles. 

The Platte Institute, which released a study in conjunction with Dr. Ernie Goss of Creighton University in April entitled Nebraska’s Tax Competitiveness: Should I Live in Nebraska?,  said the state’s recent crackdown on individuals who have  illegally registered their vehicles in states such as Iowa and South Dakota caused them to want to take a look at the situation. A recent Nebraska State Patrol news release indicated potentially more than 14,000 Nebraska residents have illegally registered vehicles. 

“There are a substantial number of great things about being a Nebraskan. Unfortunately, the motor vehicle tax is not one of them,” said Roger Lempke, Executive Director of the Platte Institute. “To have the highest vehicle registration cost, except for Wyoming, in the Midwest region and yet face such a severe roads construction funds crisis appears illogical.” 

Key recommendations in the report include overhauling the use of the motor vehicle tax to focus on transportation and infrastructure issues; restructuring the taxing system so that the Honda Odyssey example would cost $300 or less rather than nearly $600 and giving strong consideration to eliminating the assessment portion on vehicles below a certain value.