In transportation circles, there’s an endless debate about how to fund infrastructure. Raise the gas tax? Index it to inflation? Institute a vehicle-miles-traveled fee? Many jurisdictions have turned to property taxes, bonds, and sales taxes as a supplement.
But Virginia Governor Bob McDonnell is blowing the whole thing wide open with a half-baked scheme for the ages: Stop asking drivers to pay any gas tax at all.
Who will pay? Everyone else. Instead of having drivers chip in for the roads they use, he proposes to raise the sales tax.
But wait, it gets crazier: He also wants to add a $100 fee on drivers of vehicles powered by alternative fuels.
Fees like that make sense when you’re dealing with a gas tax-funded system that hasn’t found a way to adequately charge electric- and hybrid-car drivers. But taxing only drivers of alternative-fuel cars is just a complete perversion of incentives.
And it’s all made so much worse by the fact that McDonnell proposes to keep exempting fuel from the sales tax. So, that 5.8 percent sales tax he wants to levy on milk and pencils and television sets? Drivers won’t have to pay any of that for the fossil fuels they pump.
It’s bad enough when states exempt gas from the sales tax because it’s taxed separately, as 37 states and the District of Columbia do. But to exempt it from both just makes no sense.
What’s more, a sales tax is more regressive than a gas tax, taking a bigger chunk out of poor people’s wallets than rich people’s — a double whammy if you’re a low-income Virginian with no car who would end up subsidizing other people’s driving.
“This package significantly shifts the burden of paying for our transportation needs to the backs of just Virginia residents and lets the interstate driver off the hook,” Delegate Vivian E. Watts (D-Fairfax), a former state transportation secretary, told the Washington Post.
Drivers would pay something in McDonnell’s grand slam of stupid ideas. He proposes to raise vehicle registration fees by $15.
His proposals would raise an estimated $3.1 billion to shore up state transportation coffers over five years. The money will fund his comprehensive transportation plan, announced in 2009, which would raise the speed limit, expand public-private partnerships, and fund everything from high-speed rail to widening I-66 to finishing the silver line to Dulles airport.
His plan also takes a page from the Republican Party playbook, suggesting that off-shore oil-drilling money should be dedicated to transportation. Pass the Kool-Aid.
McDonnell’s earlier attempt to index the gas tax to inflation was shot down by conservatives in the statehouse after a fair amount of goading from Grover Norquist of Americans for Tax Reform. Norquist has already signaled that this plan to eliminate the gas tax altogether doesn’t sit well with him either: He doesn’t like the sales tax hike or the jump in registration fees. He wants a “revenue neutral” approach that would draw more funds from the state’s general fund. Sounds like another way for everyone but drivers to pay for transportation infrastructure.
The Post reported today that the chances for passage of this new proposal are uncertain.
If Virginia legislators have their heads screwed on straight, they’ll laugh McDonnell and his funding plan out of town. But some predict it could play well politically for McDonnell.
“Everybody hates paying the gas tax!” writes Dave Weigel on Slate. “But this idea is like a reducto ad absurdum of hippie bashing and ignores decades of policymaking that was responsive to environmental research and the oil trade.”