Va. gas tax eliminated and sales tax increased in McDonnell’s plan

Posted at 4:01 PM, Jan 08, 2013
and last updated 2013-01-08 20:44:08-05

RICHMOND, VA (WTVR)—Tuesday Governor Bob McDonnell laid out a new plan to pay for Virginia roadways, which included  the elimination of the gas tax and an increase in the state sales tax.

Under McDonnell’s plan, the Commonwealth would do away with its 17.5 cent gas tax, one of the lowest in the country. Virginia would become the first state without a tax on gasoline, which he said would likely mean the motorists would see a break in price at the pumps.

"There will people who like parts of this plan and not others," Governor McDonnell said at a news conference.

The gas tax would be replaced with a 0.8 percent increase in the sales tax that is dedicated to transportation. For instance, 0.5 percent has gone towards that funding for decades.

McDonnell said in the plan that “as the economy grows, the revenue from the SUT (sales and use tax) grows with it.”

The plan would introduce new fees to deal with the transportation maintenance shortfall.

Car owners would have to pay an additional $15 in annual vehicle registration fees.  Drivers of alternative fuel vehicles would pay an additional $100 fee under the new plan.

CBS 6 Reporter Joe St. George asked the Governor if he feels that fee puts an unfair burden on people trying to be "green."

"No," McDonnell replied. "The reason for that is those people do pay any gas tax at the state or federal level," McDonnell added.

The plan has the support of key Republicans in the House and Senate, including Speaker Howell.

Some Democrats however are critizing the plan.

Delegate Joseph Morrissey says the sales tax increase penalizes people who don't use cars.

Delegate Jennifer McClellan questioned the $100 dollar user fee for alternative fuel vehicle use. She says that may discourage people from buying into the technology.

The governor said that right now the Commonwealth needs $364 million to pay for road maintenance, such as pot holes and paving.  McDonnell said that this new plan, called “bold,” “creative” and “aggressive,” by some lawmakers, will help generate $844 million in new funding by fiscal year 2018.

Additionally, money will be raised to contribute to construction, rail, transit and other priorities, McDonnell said.