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Virginia Governor Wants to Eliminate Gas Tax, Increase Sales Tax

  • Jan 9, 2013 | Gail Cole

 Virginia Governor Proposes Sales Tax Increase to Fund Roads.

Virginia's transportation fund is on track to run out of construction money by 2017, unless a change is made to its revenue source. With that in mind, Governor Robert F. McDonnell (R) has proposed "replacing the state's outdated gas tax revenue model with a 0.8 percent increase in the state sale's tax dedicated to transportation." If enacted, Virginia would be the first state in the nation to eliminate the state tax on gasoline.

Stressing how essential transportation is to the state, the governor said, "Transportation is a core function of government. Children can't get to school; parents waste too much time in traffic; and businesses can't move their goods without an adequate and efficient transportation system." He called the gas tax a "stagnant revenue source" and said, "The time is now for an innovative and sustainable plan to meet our transportation needs and grow Virginia's economy."

The Proposed 2013 Transportation Plan calls for the following changes:

  • Eliminate the current 17.5 cents per gallon motor fuels tax on gasoline;
  • Replace the current gas tax with a 0.8 cent increase to the Sales and Use Tax (SUT) dedicated to transportation;
  • Dedicate an additional .25 cent of the state's portion of the existing SUT to transportation;
  • Increase vehicle registration fees by $15 and dedicate the revenue to intercity passenger rail and transit; and
  • Impose a $100 annual Alternative Fuel Vehicle Fee and dedicate the revenues to transit.

The federal gas tax of 18.4 cents will remain.

Virginia Secretary of Transportation Sean Connaughton said that the governor's plan "will generate more than $3.1 billion in additional funding to be invested in the Commonwealth's transportation network" over the next five years.

photo credit: JefferyTurner via photopin cc

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Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.