Governor lays out plan to eliminate gas tax, increase sales tax

Posted on: 5:00 pm, January 8, 2013, by , updated on: 11:49am, January 9, 2013

VA Gov. McDonnell

During a press conference today, Governor Bob McDonnell laid out a new plan that would eliminate the gas tax but increase the sales tax.

He wants to raise the state sales tax from 5% to 5.8% percent and wants to put the money into transportation. 

He said he’d do away with the 17.5 cent gas tax. 

Virginia would become the first state without a gas tax.

According to a press release, once the gas tax is eliminated Virginians would spend $3.5 billion less at the pump over the next five years. 

He says if the plan is passed, it would generate $844 million in additional revenue for transportation by 2019. Over a half billion more would go to construction, not maintenance, by 2019.

Click here to read the entire plan. 

The Governor’s office released this letter describing the plan:

 Dear Friend,

Today in Richmond I unveiled our plan to solve Virginia’s transportation funding challenges for the long term.

Right now Virginia is sending $364 million a year from our construction account to our maintenance account. Money meant for building new roads is being used just to patch up old ones up. That crossover amount is anticipated to grow to $500 million by 2019. So the task at hand is clear: We need at least $500 million in new, ongoing transportation funding to eliminate this structural deficit and get Virginia back on sound financial footing when it comes to our transportation system.

What’s at stake? Jobs, the future of Virginia’s economy, and our quality of life.

Our plan solves the problem.

It provides over half a billion more dollars in highway construction funding each year and eliminates the structural deficit by 2019. In fact, our plan puts $3.1 billion more into transportation in Virginia in just the next five years.

This is a sustainable, long-term solution that will fund our transportation network for decades to come.

Here’s how the plan works.

First, we will make Virginia the first state in the nation to eliminate the gas tax.

That’s right, no more gas tax at the pump. No sales tax at the pump either. When this plan passes the price of gas will go down, and Virginians will spend $3.5 billion LESS at the pump over the next five years.

We then propose increasing the sales tax from 5% to 5.8%, still below every neighboring state and the District of Columbia, and putting that increase into transportation from here forward. The advantage of that change? We’re ensuring that transportation receives the new funding it needs in the years ahead by tying it to a mechanism that moves in tandem with economic activity and inflation. That is how every other tax works. That is what will make transportation funding sustainable again.

The fact is, the gas tax is a declining revenue source. It is fixed at a flat 17.5 cents per gallon and does not fluctuate with inflation. Cars are getting better and better mileage. More Virginians are buying alternative fuel vehicles. Many have called for the gas tax to just be increased. But that’s not a long-term solution. All that would do is lead us back to the same revenue shortfall a few years down the road, and the same old debates. We need a complete change in how we fund transportation or else no new “solutions” will work. We can’t remain tied to an outdated model.

Third, we will increase the amount of money going to transportation from the current sales tax from 0.5 cents to 0.75 cents over five years. And we will fund transit and rail through new mechanisms to generate revenue for these important components of our transportation future. You can read our entire plan here.

All told, this plan, passed in its entirety, will be generating $844 million in additional ongoing new revenue for transportation by 2019. It ends our crossover problem. Over half a billion more will be going to construction, not maintenance, by 2019. And by passing this plan Virginia will be showing the nation what creative, conservative leadership looks like. We will get results by rethinking old problems and finding new solutions for them.

This plan has broad support. I was joined at today’s press conference by leaders from the House and Senate, The Virginia Transportation Construction Alliance, the Virginia Chamber of Commerce and many other business and transportation groups. They know that to grow Virginia’s economy and keep creating good new jobs here we need a sustainable, long-term transportation solution. This is it.

Now, we have to get this plan passed. For years, we’ve had debates, and we’ve heard excuses. This plan puts Virginia in the driver’s seat of our transportation future. This plan solves our problem.

I hope you’ll pass this email on to your friends, family, neighbors, and co-workers. And, most importantly, I hope you’ll click here and urge your delegate and senator to support this common sense plan. It’s time to get results.

Sincerely,

Bob McDonnell
Governor of Virginia
 

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