Opinion | Michigan continues to overcharge drivers of older vehicles

Tom Herbon is a Troy resident and a retired engineer

The cost of Michigan automobile insurance is often debated.  Unfortunately, I have yet to see a single complaint about the Michigan vehicle registration fee structure.  This is extremely disheartening because the current Michigan vehicle registration fee schedule severely penalizes drivers of older vehicles.  

The problem with the current system is that vehicles newer that 1983 calculate license plate fees based on original base manufacturer suggested retail price.  As a result, drivers of older vehicles can, and often do, pay a higher license registration fee compared to drivers of newer more expensive vehicles. In many cases, much higher.  Consider this example: I recently purchased a 2008 Cadillac for $4,500. My license plate renewal cost is $168, or 3.7 percent the cost of the vehicle. In contrast, my daughter recently purchased a 2016 Chrysler minivan for $22,500. Her license plate renewal was $162. That is six dollars less, and a mere 0.7 percent of the total vehicle price. How can Michigan justify a vehicle costing 5 times another vehicle having a lower license fee?  Drivers of newer, more expensive vehicles should never pay a lower license plate renewal fee than drivers of older, less expensive vehicles.

The current fee structure uses a vehicle depreciation schedule that stops after four years.  This means if you buy plates for a car that is eight, 10, 12 years old, you still pay license fees as if the car is four years old.  House Bill 5705 (introduced by Rep. Martin Howrylak, R-Troy), corrects this problem by applying a more accurate depreciation over 10 years which better matches National Automobile Dealers Association used car estimates.  With HB 5705, license fees will be calculated on a better estimate on what a vehicle is actually worth, not what it cost 10, 15 or even 20 years ago.

Michigan drivers of older vehicles need pay a fair amount for vehicle registration fees.  Until something changes, drivers of older vehicles will continue to pay an unfair share. This is not right.  

Similar legislation was introduced last year and never made it out of committee.  This year, the Michigan legislature needs to debate and approve HB 5705. I encourage all readers to contact their own representative and Rep. Triston Cole, R-Mancelona (chair of the transportation committee) and demand HB 5705 get out of committee and passed.  If vehicle registration fees continue to be based on “value” then they should be based on the true value.

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Comments

Jay
Fri, 09/07/2018 - 6:35am

Why is the vehicle registration based on the vehicles perceived "value" in the first place?
Why not a flat fee for each vehicle type regardless of purchase price, with larger (and more environmentally harmful) vehicles paying a higher fee?

Tom Herbon
Fri, 09/07/2018 - 2:50pm

Jay. Prior to 1984, license registration fees were based on vehicle weight. The higher the weight the higher the fee. In fact, under the current system, vehicles older than 1984 are still based on weight with a minimum fee of $29. I cannot say why it was changed in 1984 to "value" but I can only guess they changed it because it bakes in yearly revenue increases as new car prices go up over time. My issue is the current system doesn't take into account buyers of used nicer cars. I bought an 11 year old Cadillac for $4500 yet my license fee is higher than someone who buys a new 2019 for $30,000. That is not right. Road funding should be fair and equitable.

mplichtman
Fri, 09/07/2018 - 9:49am

Would like to see this change and to have all candidates explain their detailed plans for how they will make changes, not just mouth slogans.

Mark
Fri, 09/07/2018 - 9:54am

Our roads are already terrible, I see no reason to consider a proposal to decrease the amount of funds the state generates. Also, do older vehicles drive less, because if not why should they pay less to use and maintain the roads?

Tom Herbon
Fri, 09/07/2018 - 2:26pm

Mark. Older means anything older than 4 years old. Since the average age of vehicles on the road is 11 years, these are everyday drivers putting 5-10-15K or more miles a year. Under current rules, vehicles with a state calculated value less than $6000 have a license fee of $36. HB5705 not only adjusts the depreciation schedule but also increases the minimum from $36 to $88 per vehicle. To ASSUME revenues will go down is just that... an assumption. Since the low rates for vehicles older than 1984 (as low as $29) also get eliminated, I expect revenues will actually increase. At a minimum, the revenues collected will be FAIRLY collected. The fact that an owner of a 2019 C-Class convertible pays lower vehicle registration fees than my 11 year old Cadillac is criminal.

Pati
Mon, 03/04/2019 - 9:35am

The amount you drive is already factored in to the gasoline taxes we pay. And we pay a lot!
Forcing someone who cannot afford a new car but instead buys an older car for what they can afford so they can go to work and be a productive member of society to pay this huge fee is regressive. We want people to work, right? So make it affordable for people to buy an older car and get to work!
Dealers stock up on the deluxe and more expensive models as many people choose to lease instead of buy. So when you go to buy a used car the majority of vehicles are those same deluxe models forcing people to pay these fees which are supposedly based on value, but can YOU sell your year old car for what you paid for it?

Chuck
Fri, 09/07/2018 - 12:38pm

You can't divorce the formula for collecting taxes from the purpose those funds are used and manipulate the formula just to satisfy some compulsive need for internal consistency. The touchstone for taxation should be fairness. Is everyone paying the tax paying their fair share to maintain roads? There we should conclude older vehicle owners are paying their fair share in vehicle registration fees according to the current formula, and altering the formula with a meat cleaver proposal as suggested will create an intolerable inequity. The formula could be tweaked more modestly. I thinks its fine to tack on one or two more years of depreciation, but we don't need to entertain radical proposals that smack of election cycle pandering.

Tom Herbon
Fri, 09/07/2018 - 2:42pm

Chuck. What is your suggestion for "tweaked more modestly"? The depreciation schedule proposed in HB5705 is already less than the NADA estimates for used car depreciation. In 1984, the system was changed from weight based vehicle registration fees to "value" based. I am only asking that "value" should reflect actual value. There is nothing radical in HB5705. The fact that you can currently buy a 2019 C-Class convertible and pay less license fees than my 11 year old $4500 Cadillac is radical, As far as your comment on "election cycle pandering". Really??? I have worked on this with my state representative for over 5 years. HB5705 is about FAIRNESS for ALL Michigan drivers.

Lennie
Sun, 09/09/2018 - 12:50am

Scrap the entire program as it currently written. License by weight. End of story. If it's about fairness, include a yearly mileage provision.

John Q. Public
Fri, 09/07/2018 - 1:40pm

I'm with Jay. Does it cost more to register any one vehicle compared to another? If we want "fairness" why not a fixed/variable schedule? All vehicles cost $20 (or whatever) to register, plus a mileage fee--perhaps $0.005 per mile for vehicles under 2,000 pounds, $0.01 a mile for those 2K-10K, $0.015 for 10K-40K, etc. A five-ton vehicle driven 15,000 miles last year pays $170, and the more you drive, the more you pay. Park the vehicle all year, your fee is $20.

Marie
Sat, 09/08/2018 - 9:26pm

Adding a fee per mileage is very reasonable as a user fee for roads, a very good idea!

Lennie
Sun, 09/09/2018 - 12:44am

Thank your pandering elected idiots for fighting "for" the public by screwing those than can be screwed. In their small minds, it's better than being fair because that's regressive.

Brian C. Casterline
Sun, 09/09/2018 - 9:35am

Why are registration fees used as a revenue raising device at all? Charge a flat ten dollar fee and include a hardship waiver. Raise and appropriate the funds from a more progressive income or broader based property tax.

Jobon
Tue, 09/11/2018 - 9:35am

What an unfair regressive tax. Tax should be based on vehicle weight. Any calculation based on original value is BS. I bought a 1997 convertible for $1200 and my licence plates were close to $200. I don’t drive it every week either! Stop abusing the taxpayers.

Michael Marcum
Tue, 09/11/2018 - 11:06pm

I have a 2007 Cadillac Escalade AND I HAD TO PAY $280 TO RENEW MY TAGS! PLEASE EXPLAIN WHY THAT IS !!!!!!!

Phil V.
Wed, 09/12/2018 - 10:22am

Tom, thanks for bringing this bill to my attention. Tax reform is always tough but this one seems pretty straight forward. I would like to see Michigan legislature at least take up this bill and debate it so we can see why common sense should not prevail.

Laura Elsworth
Thu, 02/21/2019 - 11:48pm

Yes, this registration structure is ludicrous! With MI insurance rates (which are the HIGHEST in the country) plus the registration fees, title fees and taxes, it cost me almost as much to get my car legal as it did to purchase it. In a state with some of the worst public transportation, inconvenient and unsafe cycling conditions, plus bad weather for half the year, I'm left wondering how poor people are supposed to get around. If anyone starts a petition to demand changes to these grossly unfair registration fees, I'll be the first to sign!

Mike
Sat, 03/02/2019 - 5:36pm

Does anyone know if this ever passed?

Mike
Sat, 03/02/2019 - 5:43pm

Did this ever pass??

Chance
Mon, 03/11/2019 - 2:56pm

I know it's the same as it was as I just paid almost 260$ to register my 2019 Ford Ranger.

Jamez
Mon, 04/15/2019 - 2:56pm

I pay $231 a year for my Saab 2009 97x Aero, I paid 9k for it, absolutely a racket to keep planting potholes on our roads, the worst in the nation in my opinion ( I have only been to 50% of this country ) so what do I know.

Randall
Thu, 04/25/2019 - 8:42pm

I pay $585 a year for one of my cars and it is now 15 years old. Unless the laws are changed, I'll pay this amount no matter how old the car gets. Now, that's ridiculous! Nobody will be able to convince me that this is a fair and equitable method for taxing registration of a vehicle.

Kevin
Wed, 05/08/2019 - 9:24am

I just bought a SALVAGED Title 2001 Lincoln Navigator for 1000 bucks and I had to pay $198 to just register it. I am a MECP certified mechanic so I buy older luxury projects and save them from a slow rusty death. Why am I being punished for this? Who cares what the vehicle was worth 20 years ago. A simple price curve to adjust for yearly depreciation is all we need. For being the "Automotive Capital of the World" we sure as hell dont act like it.

Marc
Thu, 05/23/2019 - 12:38pm

The ad-valorem tax is ridicu;ous. I bought a 18 year old motor home, my bad, I did not research the registration fees well. I was shocked when I went to get my plates. I probably have an actual use of 2000 miles per year and 40 % of that is out state. If I could afford the MSRP of the motorhome I probably could also afford the ridiculous registration fees. Just another dream that is crushed by the state.

Marc
Thu, 05/23/2019 - 1:27pm

It looks to me that HB5705 is dead. I sent the following to my rep.

Hello Mr. Maddock,

I live in White lake Township.

I am writing you in regards to the ad-valorem vehicle registration fees, I feel these fees are completely unfair. I would appreciate a justification for the use of the vehicles MSRP to registration fees. How does vehicle MSRP translate to the citizens value received from the registration fees ?

I bought a used motorhome. Unfortunately I did not adequately research the registration fees. If i had I would have realized that even buying used I could not afford a motorhome. If i could afford to pay the MSRP on a motorhome I would probably not care to much about the egregiousness of the registration fee. Alas, I am not wealthy and am finding this dream crushed by the State of Michigan.

What is your position on the Ad-valorem Vehicle Registration Fees ?
Do you have any plans to introduce legislation or are you aware of any legislative activities that may address this issue?
What is the justification for the use of the vehicles MSRP to determine registration fees ?
How does vehicle MSRP translate to the citizens value received from the registration fees ?

Thank you in advance for your answers to my questions.

Kathleen Cunningham
Sat, 06/15/2019 - 4:05pm

Yes that fee structure hurts those with older cars, generally those less able to pay higher fees. How about the new $20.00 "Agency Fee" if you purchase your car license renewal online from ExpressSOS.com ? This is now an outsourced Secretary of State function. It didn't used to cost a $20.00 fee to renew online. Renewing one's registration online saves the state money.

Mike J
Wed, 06/26/2019 - 10:59am

My 2005 Porsche Cayenne that has a KBB value of $7,000 has a registration fee of over $500 a year!!! I have quit paying the registration fee because I can't afford it. I haven't been pulled over yet, but have a feeling my luck is running out. If the fee was normal I would for sure pay it, but to have this regressive tax on me because I got a good deal on a luxury car is unfair. I have a friend who worked hard and purchased a Maserati and his registration fee is over $800 a year. WTF?! The car is 10 years old and he paid $30k for it. No question the State needs to look into their registration algorithm because it's not taking into account depreciation!

Wade
Thu, 08/01/2019 - 3:58pm

I'm in the same boat. It's crazy! Frankly any vehicle registration based on vehicle value is unfair. The state of Michigan gets a more than fair cut of our car cost through purchase sales tax. Pricier vehicles don't use up our road infrastructure any more than cheap ones.

Julie Jensen
Fri, 06/28/2019 - 11:53pm

Just paid over$200 for my 2003, rusty, suburban that I purchased for$3000. I can't believe it! We just moved to Michigan and there are SO MANY fees and unjust taxes! We need to raise awareness and make some noise via social media to get this changed! These rates are unfair to those of us who buy older cars because we are broke! In Wisconsin most people pay around $85 for licence and registrations. It is a standard rate. A fair, standard rate. Michigan, I love you, but I DON'T love this unfair pricing!

Wade
Thu, 08/01/2019 - 3:53pm

I absolutely agree with this fee inequity. I have a used car that costs $500 annually for registration based on it's original exotic sticker price. It's ironic that an older muscle car that I own with a higher value costs next to nothing to register with historic plates. With the increasing number of people owning 5 to 15 year old cars this is an injustice that needs to be corrected.