Proposed phased reduction in motor-vehicle excise tax draws opposition from cities and counties

Representative Keith Kepnick told the Finance and Taxation Committee House Bill 1436 would create a graduated excise tax schedule for vehicle sales: the current 5 percent rate would remain for the first 10 years of a vehicle’s life, drop to 3 percent after 10 years and to 1 percent after 25 years.

"When you get ... past the 25 year mark, some of these vehicles actually become worth quite a bit of money," Representative Keith Kepnick said, arguing that restored collector vehicles can be worth tens of thousands and that the current flat excise rules can be inequitable.

Kepnick said the bill targets transactions involving older, collector-type vehicles and that most excise revenue is generated by sales of newer vehicles.

City and county organizations urged lawmakers not to advance the measure. Matt Gardner, executive director of the North Dakota League of Cities, urged a "do not pass" recommendation, saying the fiscal note would reduce funds dedicated to infrastructure projects. "Now is not the time to reduce infrastructure investments," Gardner told the committee.

Aaron Burst of the Association of Counties echoed the concern and asked that lawmakers, if they amend the rate, ensure any lost dollars are reflected elsewhere in local funding allocations.

Committee members discussed narrower amendments that would target only vehicles 25 years and older; Kepnick said he would be open to that approach but also noted prior similar proposals have generated extended debate. The committee closed the hearing without a vote.

Ending: Lawmakers and local-government representatives signaled concern that any reduction in excise tax collections would reduce monies available for roads and other infrastructure; no committee vote was taken.