By Crystal Vandegrift and Brian Carlton

The Charlotte Gazette

Just about every county in the Commonwealth has been struggling with the burden of higher personal property taxes for its citizens.

Charlotte County is no different.

However, county officials became aware of the expected increase in rates and took action.

For FY 2022, we reacted first and could offer a reduced rate but still have a lower rate than in FY 21,” said Commissioner of the Revenue Naisha P. Carter. “Other localities weren’t able to do that until this year for them, the calendar year 2022.”

While citizens from other counties were seeing higher personal poetry bills in 2021, Charlotte citizens who own used vehicles saw some tax relief when they opened their personal property tax bills.

In October 2012, following a public hearing, the Charlotte County Board of Supervisors (BOS) unanimously voted to approve a temporary lower personal property tax rate.

The new temporary personal property tax rate was set at $2.60 per $100 of the assessed value of the personal property, which is $1.35 per $100 of the assessed value less than the previous year at $3.95 per $100 of assessed value.

The decreased tax rate was effective for the Fiscal Year 2022, which began on July 1, 2021, and extended to June 30, 2022.

“When the FY2023 budget was adopted, the Board established the rate at $3.25, which was still nearly 18% below the rate of $3.95,” said County Administrator Dan Witt. “The Board realized the value of used vehicles was appreciating and not depreciating and therefore did not set that rate back to the FY2021 level.”

HOW DOES MY TAX BILL WORK?

A city or county doesn’t set the value of your vehicle. That’s what drives the bill you get. They have to use the values from a recognized pricing guide. Prince Edward County, for example, uses the National Auto Dealers Association (NADA). They take the vehicle’s VIN number, type it in and get the value NADA assigns.

Here’s the first point where cities and counties get a choice. They have to determine which value to go with. They can choose the retail value of a car, the trade-in value, or the loan value. Retail value is the price if you want to go and purchase it off the lot. A trade-in value is a price you’d get if you try to trade the car in at a dealership. The loan value is what the bank would give if you tried to borrow against the car or truck. According to NADA, the loan value is considered the lowest.

Cities and counties have the option to pick any of these three. Some areas, like Appomattox, use trade-in value. Once they pick one of the three, the city or county applies their tax rate to that value in order to determine how much a person owes. That means even if a city or county’s tax rate goes down, the tax bill also spikes if that value climbs. And the value of all used cars has gone up dramatically over the last year.

WHY DID CAR PRICES CLIMB?

In March of 2020, the Federal Reserve cut the interest rates to nearly 0%. These unprecedented low-interest rates on both new and pre-owned vehicles allowed consumers to purchase them sooner than they would have. Strong demand means higher prices.

The “COVID-19” related closing of certain auto manufacturing plants for the necessary production of ventilators and other Personal Protective Equipment caused a further reduction in inventory.

Large fleet companies (E.g., rental agencies and car services) chose not to replace inventory, adding to the shortage of pre-owned vehicles in the market.

According to NADA and Kelly Blue Book, auto manufacturers built 1.7 million fewer vehicles in 2021 compared to 2019. And that deficit hasn’t been fixed yet, thanks to one tiny issue.

It’s a computer chip problem. The pieces needed to produce new cars aren’t getting to the manufacturer. Take General Motors, for example. In order to produce new cars, they’ve suspended heated seats as a feature because the computer chips to make them work aren’t in stock.

Beyond shipping, the computer chips aren’t being built in the quantities needed. Ukraine produces 25% of the world’s supply of neon. That neon gas is used to make semiconductor chips. No gas means no chips. And no chips means fewer new cars.

As a result, the value of used vehicles keeps spiking. Kelly Blue Book’s data shows as of April, prices for used cars had spiked 28% higher than in 2021. As things slowly get back to normal, that’s changing.

As of Monday, October 31, the latest numbers show that price growth was just 11% higher than last year. Just don’t expect a fix coming soon. At the World Economic Forum, Intel CEO Pat Gelsinger cautioned that supply problems with computer chips will likely last into 2024.

For local residents, that means you can expect a bit of sticker shock on the assessed value of your vehicle at least a while longer.