Over the past few weeks a number of you have contacted me regarding your thoughts on Governor McDonnell’s transportation plan. At a time when our transportation infrastructure is preventing businesses from coming to Virginia, and families from settling in Virginia, something must be done. I supported Governor McDonnell’s initial plan, because I believed that it was a plan that would benefit all Virginians. Unfortunately, I cannot say the same about the plan that came out of the conference committee.The bill that was reported from the conference committee is a totally different piece of legislation than the proposals made by Governor McDonnell earlier this Session. This new legislation involves a series of massive tax increases that I simply cannot support.
We received this 109 page bill late yesterday evening, and to my knowledge it is still not available to the public.
I supported Governor McDonnell’s plan because I generally favor the idea of moving away from the gas tax and towards other forms of revenue to solve our transportation problems. Because motor vehicles are becoming more and more fuel efficient, the use of the gas tax for transportation funding is unsustainable long term. The legislation proposed by the conference committee would replace the current 17.5 cents per gallon flat tax on gasoline with a 3.5% wholesale sales tax. It also adds a 6% wholesale sales tax on diesel fuel. This wholesale sales tax will be passed onto consumers, and will continue to be a declining revenue source as Virginians continue to buy less gasoline. I do not believe that the move from the current gasoline tax to the wholesale sales tax on gasoline will guarantee lower fuel prices at the pump.
I also supported the Governor’s plan because I support using general fund dollars to help maintain transportation. This plan decreases the amount of general fund dollars we will use as compared to the Governor's plan. Additionally, it will increase the sales tax in Northern Virginia and Hampton Roads to 6% and to 5.3% for the rest of the state. It will increase the 3% tax on the purchase of motor vehicles to 4% in 2014 and it will continue to increase each year until 2015 when it will be 4.3%. This increased tax is extremely harmful to both consumers and our local auto dealers.
It will also add a 3% occupancy tax for hotels in Northern Virginia, as well as a cost of an additional 25 cents for every hundred dollars on the sale of a house. Like the Governor’s plan, it still included a $100 annual fee on alternative fueled vehicles, including hybrids.
The legislation will increase the personal property tax from 3.5% to 4.3% and increases the tax on vending machine sales from 4.5% to 6% in Hampton Roads and Northern Virginia and 5.3% everywhere else in Virginia. It also increases the tax on heavy equipment used for contracts on road construction, railroads, docks, etc. from 3.5 to 4.3%.
Finally, if Congress passes the Marketplace Equity Act (proposed legislation to require online businesses to collect sales taxes) 22.2% of the proceeds will go to transportation. If they do not pass this act, Virginia would add an additional 1.6% to the wholesale gas tax. There is no provision in the law to revert back to 3.5% wholesale gas tax should Congress pass the internet tax law after 2015.
Every Virginian will pay an increased sales tax under this plan, while continuing to pay taxes on gasoline. Families and businesses in Virginia are already under a threat of new taxes from Washington, the fiscal impact of the federal health care law, and the rising gas prices. Virginia’s taxpayers are already tightening their belts, and I do not believe that in these tough economic times they should be expected to shoulder this enormous tax increase. Additionally, this legislation offers no safeguard that a future General Assembly will not come back in the future and reinstate the gas tax on top of these other taxes.
I have read through the details of this legislation, and talked to a number of folks on each side. I ultimately feel that this legislation is not good for the 20th District or rural Virginia. I recognize the importance of solving our transportation problems, but I believe that in the rush of getting something passed we have produced legislation that does more harm to our citizens than good. And for that reason I simply cannot support it.
I encourage you to stay in touch with my office if you have other questions or comments about this or any other issue. Thank you for allowing me to serve as your Delegate.