Virginia governor proposes eliminating state’s gas tax, hiking sales tax
January 9th, 2013
09:05 PM ET
1 year ago

Virginia governor proposes eliminating state’s gas tax, hiking sales tax

(CNN) – Virginia Gov. Bob McDonnell said Wednesday during an annual address that his proposal to eliminate the commonwealth’s gas tax, increase its sales tax and enact a new fee on alternative fuel vehicles was an “innovative” plan that could shore up long-standing shortfalls in Virginia’s transportation budget.

Speaking to Virginia’s General Assembly during his State of the Commonwealth speech, McDonnell said that the plan wouldn’t suit all legislators, but it was a necessary compromise for new infrastructure to be developed.

“I know there are parts of this plan you will like and parts you won't,” McDonnell said. “That's true of any innovative and comprehensive transportation plan. But we cannot let another session be lost as each member holds out for their perfect plan. The more we sit and debate, the longer Virginians sit and wait.”

Some of the nation’s most congested roadways are found in the northern Virginia suburbs of Washington, according to the Texas A&M Transportation Institute. Arteries in the Hampton Roads region of southeastern Virginia also rank as some of the nation’s most clogged.

States have long relied on the gas tax to pay for transportation infrastructure projects, of which Virginia has several. An extension of Washington’s metro rail system to Dulles Airport in Virginia has been going on for several years, with the cost reaching into the billions.

However, as vehicles become more fuel-efficient and drivers rely on alternative fuels, revenues from the gas tax have decreased. McDonnell noted in his speech Wednesday that “the gas tax is worth 45% of its purchasing power from 1986” and has never been increased.

Climate change activists and some economists have suggested increasing the gas tax as a way to increase revenue for transportation. McDonnell, considered a potential candidate for the 2016 GOP presidential nomination, has gone in the opposite direction. If his measure to eliminate the gas tax succeeds, Virginia would be the first state to get rid of the tariff. A tax on diesel gas would remain in effect.

To fill the gap, McDonnell has proposed increasing the state sales tax by 0.8%, a move he said on Wednesday “will provide over $600 million more than our current gas tax revenues from organic economic growth, not tax increases.”

McDonnell’s plan also calls for a new annual $100 fee on alternative fuel vehicles. The governor;s office said that would provide $66 million over five years in additional revenue for transportation projects. On Wednesday, he also cast the new fee as a measure to inject fairness into how transportation funds are raised.

“I'm a strong supporter of alternative fuel vehicles, and I've directed that we convert the state vehicle fleet to natural gas, but these vehicles generate little federal gas tax revenue and therefore need to contribute their share to fund the roads they use,” McDonnell said.

Alternative vehicle drivers surveyed by CNN’s Richmond-area affiliate WTVR weren’t pleased with the plan, which they worried would discourage Virginians from purchasing the environmentally friendly cars.

“I’m hoping it remains a proposal, as opposed to a law,” Toyota Prius owner Aubrey Pettaway said.

And University of Richmond Transportation economist George Hoffer said the plan was penalizing drivers of alternative fuel vehicles “in a very funny way.”

“We’re penalizing them with a $100 per year fixed fee,” he told WTVR. “Now that would make sense if we were getting most of our revenues from the gas tax, but it’s now being switched to the sales tax.”


Filed under: Bob McDonnell • Virginia
soundoff (13 Responses)
  1. David

    Fine with me, but make it 6% for easier calculation. Cap it at 6%.

    January 9, 2013 09:13 pm at 9:13 pm |
  2. S.B. Stein E.B. NJ

    The idea of cutting the gas tax only encourages people to but the large inefficient fuel guzzler vehicles. The tax should be increased. There should also be a larger tax when gas guzzlers are puchaced.

    January 9, 2013 09:27 pm at 9:27 pm |
  3. Gurgyl

    Pathetic–drive only when you have to. That way these oil companies will have trouble to get your dollar.

    January 9, 2013 09:36 pm at 9:36 pm |
  4. MaryM

    Gas taxes usually go to repairing roads. So Va. people, get use to those potholes

    January 9, 2013 09:53 pm at 9:53 pm |
  5. CBP

    Hmm. Wonder what he is up to now. The norther half of the state has different requirements then the southern half. A ride around the beltway clearly shows how many citizens are relying on their cars for transportation. The addition of new highway lanes and new Metro stations should help. This is all from past administrations. What will this Governor add?

    January 9, 2013 10:07 pm at 10:07 pm |
  6. MikeA

    Sounds like it was written by the oil industry. How can he get it so completely wrong? This is breathtaking in its inanity.

    January 9, 2013 10:13 pm at 10:13 pm |
  7. Wallaceboy

    Love to stick it to those Prius driving liberals.........Oh, btw, Popular Mechanics did a corbon footprint analyis on the Prius and found that the Chev Suburban was more enviromentally friendly than the Prius. 80% of all Obama stickers can be found on two cars – Prius and Volvo – fact!

    January 9, 2013 10:57 pm at 10:57 pm |
  8. J.V.Hodgson

    the problem is that o.8% increase in sales tax hits people who dont have a car and invariably have to live in areas not well serviced by public transport.
    Surely the more correct way to proceed is say a Road fund license for all vehicles and to have the most expensive one for pure gasoline fueled engines, diesel fueled and staggered to cover the engine capacity.Then it can be sat 20-25% % cheaper for hybrids Including LPG fueled vehicles and 30 50% cheaper for full electric vehicles
    The gas tax remains on all vehicles as now and you have on top specific a identifiable fund for infrastructure imrovement. of Roads rail and other public transport.
    Regards,
    Hodgson.

    January 9, 2013 11:16 pm at 11:16 pm |
  9. Name lynn

    gov bob the people hope you are during the right thing not raising the taxes. the people is watching an waiting to see what happening next.

    January 9, 2013 11:17 pm at 11:17 pm |
  10. pn

    This guy seems to have even fewer braincells than Michele Bachmann.

    January 9, 2013 11:33 pm at 11:33 pm |
  11. yogi

    "A new annual $100 fee on alternative fuel vehicles"? Good Lord how long do we need to endure the stupidity of Republicans?

    January 10, 2013 12:22 am at 12:22 am |
  12. James Kean

    The idea of placing a tax on those who opt into a hybrid vehicle is outrageous! We who paid a premium to drive a hybrid automobile should not be further taxed for that choice. I hope this is a failure from the start.

    January 10, 2013 03:54 am at 3:54 am |
  13. John Albert

    If the gas tax is eliminated and sales tax increased, it will unfairly place more
    burden on the aged and disabled which generally drive less or not at all, and already
    have the US congress searching for ways to divert funds toward the wealthy from
    them,

    January 10, 2013 07:49 am at 7:49 am |