AP Analysis: Tag relief? $10 Miss. car tag no where in sight as debate still waged over costs

n 1994, the tax on the sale of a new motor vehicle increased from 3 percent to 5 percent. The money went into a tag reduction fund at the Mississippi State Tax Commission, and it was earmarked to reimburse local governments.
The amount of money in that fund in any particular year is driven by the sale of new cars.
In a good economy, motorists have seen on their annual car tag renewal notices a credit that nearly cuts in half what they pay, out of pocket, for the license plate.
In bad economic times, such as now, the tag credit falls because new car sales are down and there is less money to send back to local governments.
Sen. Hob Bryan, D-Amory, was chairman of the Senate Finance Committee in 1997. He suggested to lawmakers then that the tag reduction fund at the Tax Commission could ultimately run out of money. He proposed a bill that would cap the credit at $500 per tag to prevent a shortfall.
Senator after senator railed against the bill, and it was defeated.
Twelve years later, the Legislature appropriated $38 million to shore up the tag reduction fund. The issue of high car tags remains unresolved.
“I wasn’t so much hung up on the mechanics of how we did it,” Bryan said this past week. “Given where we are, what we need to do is put the tag credit at a fixed dollar amount or a fixed percentage that does not vary year by year based on much sales tax is collected on automobiles.
“You can argue about how much it needs to be, but as long as we have this silly scheme this is the sort of thing that is going to happen,” Bryan said, speaking of the shortfall in the tag fund.

AP
8/4/9