MONTGOMERY, Ala. (WIAT) — If you’ve noticed you’re paying more this year to renew your car tag, you’re not alone. Those at the Automobile Dealers Association of Alabama say it’s one of the many ripple effects of the pandemic.
ADAA President Tom Dart has worked in the auto industry nearly 40 years. He says he’s never seen such shortages of new cars, and price increases for used ones.
“It’s basic supply and demand. There’s a big demand for cars, and there aren’t enough cars to meet that demand so the price goes up,” Dart said.
With that increase in many cars’ market values comes an increase in taxes to renew your tag. County courts act as the middle man to collect that money for the state, known as the ad valorem tax.
“The ad valorem tax is a tax that the state charges, which is 15% of the value of your vehicle,” Montgomery County Probate Court Judge J C Love said.
Love says his office is getting calls from concerned residents paying more this year than last.
“Some people are seeing increases from $10 to sometimes $20, $25, and that’s a lot, particularly when people are dealing with the increase in prices of gas, and milk and eggs and bacon and things at the grocery store,” Love said.
Alabama’s Revenue Department determines the value of the vehicle, which determines how much you’ll pay, plus a $23 flat fee.
“There’s really not much you can do about this unless the legislature changes the law. Some states don’t have a property tax component to the tag fee, it’s just a flat fee,” Dart said.
Dart says he’s optimistic things will go back to normal soon.
“The last two months, wholesale prices of used cars have actually declined a little bit, maybe like with inflation we’re starting to see things get back to normal,” Dart said.
Dart says the average age of a car in Alabama right now is 13 years, so the timing of this supply issue is particularly challenging for those in need of a new car.