Committee adopts amendment to set vehicle depreciation starting point at 85% of MSRP; substitute for HB 3,035 passes
Loading...
Summary
The Special Committee on Tax Reform adopted a committee amendment to House Bill 3,035 that sets vehicles’ starting assessed value at 85% of MSRP, then applies the bill’s depreciation schedule. The committee approved a substitute and voted the bill 'do pass' (5–2–2).
The Special Committee on Tax Reform adopted a committee amendment to House Bill 3,035 that sets the starting assessed value for new vehicles at 85% of manufacturer’s suggested retail price (MSRP) and then applies the bill’s prescribed depreciation schedule.
Chairman Coleman, who offered the amendment, said the change ‘‘says the starting point will be MSRP at 85% and then we will follow the schedule as was presented to us from that point.’’ He framed the change as a way to avoid relying on fluctuating used‑car market values and to create a predictable, statutory depreciation path.
Representative Joe urged simpler drafting and warned the two‑step approach might confuse implementers. ‘‘If we start at 85%, take another 15% off as soon as you drive it off the lot, you’re going to be at about 72%,’’ he said, arguing for clearer language so assessors and vendors can apply the rule consistently.
Sponsor Representative Strickler said he supported the amendment for predictability, likening the approach to established depreciation tables for business equipment. ‘‘The whole point of having a depreciation schedule is predictability and also to make sure it depreciates each year,’’ he said, adding the proposed system would use vendor database inputs rather than ad hoc market valuations.
Several members raised fiscal and distributional concerns. One member warned that changing personal property assessments without adjusting levy structure by subclass could shift tax burden to real property and homeowners, noting a committee estimate referenced in discussion of a ‘‘potential $85,000,000 hit to locals.’’ The committee noted related property‑tax measures would be needed to avoid unintended shifts.
After discussion, the committee voted to adopt the committee amendment. The chair moved to roll the amendment into a committee substitute and adopt that substitute. On a roll call, the committee recorded five ayes, two noes and two present; the clerk announced the substitute for House Bill 3,035 had passed the committee and was voted ‘‘do pass.’’
The committee will send the committee substitute to the full House for further consideration; members noted additional floor debate would remain possible.
