Another Taxing Question
The General Assembly's elimination of the car tax exemption means everybody who owns a motor vehicle in Rhode Island is now paying more in property tax. This week Jim Hummel takes a look at one local town councilman who isn't paying the standard registration fees or taxes on vehicles that he, his girlfriend and his mother are driving.
Hummel: ``The legislature's decision to eliminate the car tax exemption means everybody who owns a motor vehicle in Rhode Island is now paying more in property tax. This week we take a look at one local councilman who isn't paying the standard registration fees or taxes on three of his vehicles. And - he says - it's all legal.''
Several nights a month you can find Angelo Padula Jr. in the council chambers at West Warwick Town Hall, sitting as the council's vice president. By day he is the third-generation owner of Angelo Padula and Son Used Auto in the Natick section of town.
For the past two years Padula has been driving this 2005 Ford F-150 truck. You can see it parked in his driveway every night, outside Town Hall when he goes to meetings, and on the street next to his business every day.
Padula uses one of the three used car dealer plates issued to his business by the registry to make the vehicle street legal. He put another on this Buick that his 79-year-old-mother Frances drives. The third resides on this Nissan being used by Padula's girlfriend. The state of Rhode Island charges him a total of $30 a year for the three plates. The used dealer plates mean the three vehicles don't have to be registered - and because of that don't generate standard registration fees, sales tax or property tax.
So we went to Padula - who was meeting last month with representatives of the DOT about the Natick bridge near his business - to ask him about it.
Padula: ``The dealer plates are the ones that we're showing. ones that we run around with all day to do errands, pick up parts, go buy cars from body shops or car dealers, auctions.''
Hummel: ``What about the ones on your car? Is that car registered?''
Padula: ``The one on my truck, the business truck? No, it has a dealer plate on it.''
Hummel: ``What about your Mom.''
Padula: ``My mom? My mom is the vice president of the corporation.''
Hummel: ``So she works at your business?''
Padula: ``Yes, she's the vice president and treasurer.''
We asked the Dealers' License and Regulations office of the Division of Motor Vehicles about the regulations on used dealer plates. Most dealerships have to conform to extensive requirements that include having a 2,400-square-foot building.
Hummel: ``You have to meet certain requirements for that, don't you? Dealership, a whole form you have to fill out with space, storefront. You're not really a dealer, right?''
Padula: ``We're grandfathered in - we had dealer plates since the 1960s - the requirements then were a 1,200 square foot building, which we have.''
The registry confirmed that Padula's business is grandfathered in.
But a registry official also told us that only Padula and his father, who is now 87 and does not take an active role in the business, are allowed to drive vehicles with the dealer plates.
And the vehicles bearing the dealer plates have to be for sale.
Padula says the three with the dealer plates ARE for sale - even though he's been driving this truck for two years - treating it like a personal vehicle, with a special legislative sticker on the windshield and a campaign sticker on the bumper.
Our investigation also found he is driving with an expired inspection sticker - a violation of the used dealer plate regulations.
Hummel: ``Do you think it's fair to the taxpayers as a message to them, in effect, because you have dealer plates, you don't have to register, you don't have to pay sales tax and you don't have to pay property tax?''
Padula: ``Well, the reason for the dealer plates is, we don't keep a car long enough or it's always for sale. And we generate a lot of taxes for the state of Rhode Island by selling these vehicles.''
Hummel: ``What about the truck that you drive?''
Padula: ``The truck is a business truck.''
Hummel: ``What I'm saying is there are a lot of other people who have business trucks that don't have dealer plates, right?''
Padula: ``But they're not generating tax money. We are a dealership, we are abiding by the law.''
Padula does have a car registered with the state - this 1996 Lexus that his girlfriend primarily drove - before it, and hundreds of other cars at his salvage company, were damaged by the March floods five months ago.
Hummel: ``You have three plates, one is on your truck. One's on your mother's car. What about the third one?''
Padula: ``We run back and forth to the auction with them when we buy a vehicle.''
Hummel: ``So what about the car - the Nissan - that it's on right now.''
Padula: ``That's a temporary car, my girl runs errands. I have a Lexus I lost in the flood and that's one of the cars for sale.''
Hummel: ``So she's just driving back and forth in it? It's not her car?''
Hummel: ``Does she have a car?''
Hummel: ``So she's using it as her personal car, though?''
Padula: ``For the past two months, because we lost our Lexus in the flood.''
Hummel: ``What about your mother does she work there regularly?''
Padula: ``No, she is an officer of the corporation.''
Hummel: ``But with her car, again same deal: no registration, no sales tax, no property tax.''
Padula: ``That is a business car, which I could put a regular passenger plate on that also, but she does banking, she's down there doing the bookwork, she runs to the bank she runs deposits, checks, all like office stuff, office supplies, so she uses a business car to do that.''
Hummel: ``What I'm saying is there are people who own businesses who don't have dealer plates. You've got a market, you've got a bank, a corporation that they register, they pay sales tax and everything else. They don't use dealer plates.''
Padula: ``Right, because they're not eligible to use dealer plate. they are not a car dealer.''
For the record the West Warwick Town Council voted to cut the car tax exemption from $6,000 last year to $3,000 this coming year. Meaning everyone with registered cars will be paying at least $85 more per vehicle.
In West Warwick, Jim Hummel, for the Hummel Report.