Research Report  
Senate Counsel & Research
  Senate  
State of Minnesota






TRANSPORTATION FUNDING

and

MINNESOTA'S VEHICLE REGISTRATION TAX

January 20, 1998

by

Amy Vennewitz

Legislative Analyst

Senate Transportation Policy Committee



TABLE OF CONTENTS

Highway User Tax Distribution Fund

Motor Fuel Tax

Vehicle Registration Taxes

Current Passenger Vehicle Registration Tax

Options For Changing The Registration Tax









HIGHWAY USER TAX DISTRIBUTION FUND

(HUTDF)






MOTOR FUEL TAX







VEHICLE REGISTRATION TAXES





                       
Sales Tax on Motor Vehicles Historical Collections (Formerly MVET)          
                         
                         
                         
                         
                         
    Motor Vehicle Collections Per                  
Fiscal General Sales Tax 1% Tax Annual %                
Year Tax Rate Revenue (thousands) Change 20% 25% 30% 40% 50% 60% 75% 80%
1980 4% 88,696 22,174                  
1981 4% 87,083 21,771 -1.8%                
1982 5% 103,767 20,753 -4.7%                
1983 5% - 6% 123,808 22,511 8.5%                
1984 6% 179,018 29,836 32.5%                
1985 6% 196,992 32,832 10.0%                
1986 6% 207,566 34,594 5.4%                
1987 6% 225,367 37,561 8.6%                
1988 6% 235,927 39,321 4.7%                
1989 6% 249,553 41,592 5.8%                
1990 6% 256,647 42,775 2.8%                
1991 6% 236,353 39,392 -7.9%                
1992 6.5% 270,062 41,548 5.5%                
1993 6.5% 295,989 45,537 9.6%                
1994 6.5% 332,626 51,173 12.4%                
1995 6.5% 347,077 53,396 4.3%                
1996 6.5% 381,219 58,649 9.8%                
1997 6.5% 401,751 61,808 5.4% 80,350 100,438 120,525 160,700 200,876 241,051 301,313 321,401
1998 6.5% 444,976 68,458 10.8% 88,995 111,244 133,493 177,990 222,488 266,986 333,732 355,981
Est. 1999 6.5% 435,000 66,923 -2.2% 87,000 108,750 130,500 174,000 217,500 261,000 326,250 348,000
Est. 2000 6.5% 433,600 66,708 -0.3% 86,720 108,400 130,080 173,440 216,800 260,160 325,200 346,880
Est. 2001 6.5% 449,400 69,138 3.6% 89,880 112,350 134,820 179,760 224,700 269,640 337,050 359,520
                         
        8.7% Average % Change 1992 - 1998          
                         
                         
                         
                         
Data from Minnesota Department of Finance Tax Research Division and November 1998 forecast.            
                         
Senate Research AMV                      
01/22/99                        



Current Passenger Vehicle Registration Tax

(Value/Age-Based)



Pros:



Cons:




OPTIONS FOR CHANGING THE REGISTRATION TAX


Flat Registration Tax

Pros:

Cons:

Reduce the Tax Rate



Pros:


Cons:



Change the Depreciation Schedule



Depreciation % Depreciation %
Year Current Pre-1990 Year Current Pre-1990
1 100% 100% 6 75% 35%
2 100% 90% 7 60% 30%
3 90% 75% 8 40% 20%
4 90% 60% 9 30% 15%
5 75% 45% 10 10% 10%


Pros:

Cons:

Set a Maximum Tax



Pros:


Cons:




Weight-Based Registration Tax



Other Options




SALES TAX ON MOTOR VEHICLES

(MVET)







ORIGINAL LEGISLATION   ACTUAL TRANSFER
Fiscal YearGeneral Fund
Share (%)
Transportation
Share (%)

General Fund
Share (%)
Transportation
Share (%)
19821000
1000
19831000
1000
19847525
1000
19857525
7525
19865050
1000
19875050
1000
19882575
955
19892575
7030
19900100
6535
19910100
1000





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