GRAND ISLAND, Neb. — The city’s annual motor vehicle tax will end sooner than its sunset date to coincide with the beginning of new sales tax collections.
The Grand Island City Council decided Tuesday to repeal the motor vehicle tax, otherwise known as the wheel tax, on a 7-3 vote. It was set to expire Sept. 30, but now will end on May 1.
Grand Island vehicle owners have been paying the tax, approved in August 2017, since September of that year. It was to last two years.
The fee is included on annual vehicle registrations. It generates $100,000 a month in revenue. By repealing the tax, the city will receive about $400,000 less.
A voter-approved half-cent sales tax increase will begin April 1. The city will start to collect revenue from that tax increase on goods purchased in the city, excluding groceries, in June.
Councilman Chuck Haase proposed the early repeal of the wheel tax. He said the sales tax will bring in $1.7 million this budget year, which ends in October.
“Instead of a $400,000 loss, our budget will actually have a $1.3 million gain if we approve this ordinance,” Haase said.
He also said council members told the public that, if the sales tax increase passed, they would get rid of the wheel tax. There will be one month in which the wheel tax and sales tax increase will both be collected, but Haase said that was the best arrangement the city could make.
Brian Schultz, who is an accountant for the city, spoke as a citizen against the repeal.
He said that there was a reason the tax was set for 24 months and that was to be fair and equitable by having everyone pay it twice when registering vehicles. Repealing it early means some citizens have paid the tax two times, while others will pay it only once.
Councilman Clay Schultz,
along with council members Jason Conley and Vaughn Minton, voted against repealing the wheel tax. Schultz said he didn’t think it would be prudent to remove $400,000 in revenue that can be counted on without knowing exactly what the sales tax increase will bring in.
The city sales tax will rise from 1½ cents to 2 cents. The state tax is 5½ cents.