I recently had to renew my motor vehicle title due to a paperwork mix-up. I didn’t dot my “i” or cross my “t” and thus was subjected to endless paperwork. While calculating the fees, I bumped into something common within Minnesota: the wheelage tax.
A wheelage tax is a $5 tax that is levied by a metropolitan county board of commissioners on vehicles kept in their county … The tax is determined by where the vehicle is ordinarily stored or parked during non-business hours or when not in use. –MN DOT
County Commissioner Matt Look said he resents the mandatory tax level of $10 imposed by the state … “The reality is, we probably would have left it alone at $5, but the state comes along and tells us it has to be 10 bucks,” he said. “It begs the question, why didn’t they start at $5? Why didn’t they call us and ask what we thought, instead of putting a 100 percent increase on people who are struggling now?”
The wheelage tax* is a user fee for roads. It’s not as fair as a direct gasoline tax where those you drive more pay more, but it’s close. If you own a vehicle, you pay $5 (or $10 soon) every time a vehicle has to be registered (typically at the point of registration). In the past decade, I have registered two vehicles and have paid a total of $10.*
How much is this tax hurting struggling people? Here’s how my recent fees looked:
| Registration Fees | |
| Filing Fee | $10 |
| Title Fee | $7.25 |
| Late Fee | $2 |
| Technology Fee | $2 |
| Wheelage Fee | $5 |
| Public Safety Fee | $3.50 |
| Assig. of Security Interest | $1.00 |
| Title Transfer Fee | $6.50 |
| Transfer Tax | $10 |
| Total | $47.25 |
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The overall cost of owning and operating a motor vehicle is a lot. Estimates are around $7,000 to $10,000 a year [here / here]. Direct user fees (outside of gas tax) are a very small portion of the cost. I drive noticeably less than the average American and own a 10 year old, used car outright (so, no monthly payments). However, driving still probably costs me around $3,500 to $4,000 year. Considering this, my total fees paid (including the wheelage tax) equal around less than 1% of my total operating cost for 2012.
Wheelage is a form of direct taxation; meaning that if you buy an automobile, you help pay for the maintenance of the roads you’ll be using in your local county. This tax brings in $1.3 million of Anoka County’s $8 million road maintenance budget* [source]. That’s not insignificant.
Here’s the problem: whether this tax is dropped or not, Anoka County will be spending the scheduled $8 million in road maintenance. Now, instead of being paid for by drivers of automobiles, it’ll likely be snatched out of the other way county governments are funded: property taxes. This short-sighted dropping of the wheelage tax disproportionately punishes people who do not drive, or people who continue to use old automobiles.
This is a classic example of not reducing the overall tax burden, but merely shifting it and then calling it a victory [source].
The short-sightedness is that conservative-leaning Anoka County is dropping the tax primarily because they do not like the State of Minnesota dictating what local government can and cannot do. This is outlined in Commissioner Matt Look’s comment above, and from Commissioner Scott Schulte, who said in an interview;
“Frankly if they had left it alone at $5, this probably wouldn’t have come up and wouldn’t be an issue,” said Anoka County Commissioner Scott Schulte, who voted with the majority to scrap the fee. “The Legislature handcuffed us.” – Minnesota Public Radio
Local autonomy is a conservative viewpoint; and one that I can empathize with. For example; if Minneapolis wants to create a value capture district to fund a local streetcar (or a bike lane on Minnehaha Avenue), why does it need the approval of a State or County official who doesn’t live in the area? Maybe it is wrong of the State to dictate the total cost of the fee, but on the other hand, the State isn’t dictating what can be done with the revenue. That’s entirely up to the county. The conservative argument of local autonomy really doesn’t hold up.
Compared to the cost of operating a motor vehicle, the wheelage tax is insignificant. However, just because a tax “isn’t much” doesn’t make it right. Yet, in my mind, I can’t think of a more fair way to generate revenue for road maintenance: if you use the roads, you pay for it.
Anoka County is being stubborn for political reasons. That’s too bad because they still need to maintain the same roadway network and spend the same amount of money. Only now it won’t be from direct user fees. To make matters worse, they are shifting the burden from something that isn’t a burden (a mere $5 to $10 every couple of years) to something that is a real burden for people (property taxes).
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* The wheelage tax is not the best way to tax for roadway maintenance, but it’s certainly better than what is being proposed.
* Actually, I’m not sure if this is even true because my previous vehicle would have been transferred sometime around 2004 or 2005, which may be prior to the tax being enacted.
* It’s very surprising that Anoka County spends $8 million on road maintenance. They’ve got a lot of sprawling and rural places that have really built out road networks. it’s hard to believe they can maintain it all on $8 million.