Va. Gov. McDonnell Wants to End Gas Tax

Virginia Gov. Bob McDonnell recently unveiled a plan to spend more than $3.1 billion on transportation funding over the next five years by raising the state’s sales tax and abolishing the state gas tax.

If McDonnell gets his way, Virginia will be the first state to eliminate the state gasoline tax. The proposal comes as states across the nation see their gasoline tax revenues fall, largely because of more fuel-efficient vehicles, and worry they will see less dollars in aid coming from the federal level. The state of Virginia faces a transportation maintenance shortfall of $364 million in fiscal 2013 and will have to shift money intended for road paving and pothole plugging to fill the gap if the plan isn’t adopted, according to McDonnell’s office.

“The gas tax is a stagnant revenue source, and no changes to it will provide a reliable growth mechanism for transportation in the state,” McDonnell said in a statement. “The time is now for an innovative and sustainable plan to meet our transportation needs and grow Virginia's economy."

Under this proposal, funding lost through scrapping the 17.5 cents per gallon gasoline tax would be partly offset by hiking the current sales tax and use tax dedicated to transportation by 0.8 cents. The plan also calls for dedicating an additional 0.25 cents of the SUT to transportation.

Increased spending on passenger rail and transit would be partly paid through an increase in vehicle registration fees, and the latter mode would also get a funding boost through the implementation of a $100 annual Alternative Fuel Vehicle Fee.

"This is a bold plan that makes a critical investment in Virginia's transportation system," Speaker of the House William Howell said in a statement. “This much-needed investment shows a commitment to upgrading and improving our state's infrastructure that will help attract businesses to Virginia and create jobs."

Source: Journal of Commerce