Manassas plans to raise car tax after discovering it owes $850K to businesses in tax mistake

- The City of Manassas is admitting to a costly mistake after it found it has been overcharging businesses on their tax bills for years. However, the plan to fix the problem is not sitting well with some residents because the money to reimburse the businesses would come from taxpayers.

While preparing for a budget proposal, staff within the city government noticed they had been accidentally using a tax rate on businesses higher than what the tax code actually allows for. With interest, the city owes $850,000 to business owners. Split among the businesses will be an average refund of about $500 a piece.

The business owners FOX 5 spoke with were happy, especially those who don't live in Manassas. That is because it appears the money will have to come from a new tax increase on residents.

“The city will have to pay back the amount we overcharged on this business personal property in one form or another,” said Patrick Pate, the city manager for the City of Manassas. “So yes, the citizens will pay that back because we are a government. Anything that we have to spend out comes from the citizens. We made a mistake and we are going to fix that mistake and move forward.”

The city council is expected to pass an increase on what is known as the “car tax.” Currently each year, residents in Manassas pay $3.25 per every $100 of the value of their cars, trailers and boats. That tax would jump to $3.60.

Unsurprisingly, some residents are not too happy about this tax hike.

“I think they need to figure out where to get the money other than from the people that had nothing to do with their mistake,” said one resident. “I have only lived here six months, but it wouldn’t matter where I live. This is just wrong.”

“I think the city should look to see if there are other places they can find the money,” said another resident. “But if they can’t find the money anywhere else, I think as someone who pays the property tax on those vehicles, I think I would be okay for pay it for a year if that is the amount of time that it takes to raise the funds to pay back the businesses that they overcharged. But then I would really have a serious question about what they are going to do with the money in years afterwards. Is it a permanent raise or a one-time raise in my property taxes?”

The city council approved the plan in a preliminary straw poll, but a final decision will not be made until Monday. As of now, the new car tax hike would be a permanent change. 

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