Virginia Gov. Bob McDonnell (R) has offered an alternative proposal to address his state’s chronic transportation underinvestment. The proposal would eliminate the state gasoline tax of 17.5 cents per gallon and replace the lost revenue by increasing the state’s sales and use tax (SUT) by 0.8 cents and dedicating that portion for transportation, increasing the portion of the existing SUT for transportation, increasing the vehicle registration fee by $15, and imposing a $100 fee on alternatively fueled vehicles.
According to the Tax Foundation, the proposal would provide an additional $1.221 billion in revenue for transportation over the next five years. If a federal law is enacted to allow states to collect sales taxes on internet sales at the time of purchase, the proposal would generate an additional $1.6 billion in revenue over the next five years. If adopted Virginia would be the only state in the country without a gas tax. The proposal would retain the tax on diesel fuel.
In making the announcement Gov. McDonnell pointed out that it is intended to address problems with reliance on the gas tax for future transportation investments because the gas tax: is a cents per gallon fee and therefore looses buying power over time due to inflation, is difficult to get political support for increasing and more fuel efficient vehicles and vehicles that rely on alternative fuels decrease the amount of revenue that is generated.
Virginia’s legislature is currently in session and will be considering the proposal.
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