Iowans would pay a bigger fee each time they buy a new or used car, under one proposal a citizens commission is considering to raise more money for roads.
Stuart Anderson, with the Iowa Department of Transportation, says the state could collect as much as $50 million more by raising the new or used car fee by one-percent. “That fee right now is at five-percent and one of the items being discussed is to increase that fee to six-percent so it would match the sales tax paid at the state level,” Anderson said.
In the past, the use tax on a vehicle purchase was tied to the state sales tax, but that isn’t true any more. Anderson says the bigger fee would be easy to collect, but he admits it could discourage vehicle sales.
“I should emphasize this is just one of the things the citizens advisory commission is considering as they gather input on the condition of roads and whether funding needs to be increased,” Anderson said. The commission is also considering a hike in the state’s gas tax, which has remained unchanged since 1989.
The Iowa DOT is facing a projected 200 million dollar shortfall in road and bridge repair funds.