VA Gov. McDonnell to eliminate gas tax, tax alternative fuel vehicles instead

[Puppycow]

From his own website

Virginia's current transportation maintenance funding shortfall means that in FY 2013 $364 million must be transferred from the state's construction account to pay for road maintenance. That transfer amount is anticipated to grow to $500 million by FY 2019 unless new funding is provided. In short, Virginia has to use money meant for construction for paving and potholes.

Ah, so there really is a problem. More revenue is needed to fix potholes and such. The 17.5 cent/gal gasoline tax is not enough to pay for the state's road maintenance needs. So how to address that shortfall?

Step 1:

Eliminate the current 17.5 cents per gallon motor fuels tax on gasoline: The viability of the gas tax as the state's primary revenue source for transportation has been eroded by greater vehicle fuel mileage, the introduction of alternative fuel vehicles and the impact of inflation.

Step 2:

Replace the current gas tax with a 0.8 cent increase to the Sales and Use Tax (SUT) dedicated to transportation: The SUT is a reliable, predicable and sustainable revenue source. For decades we have already had the policy that .5 cents of the sales tax goes to transportation.

This is a sales tax. So the burden of paying for maintenance of Virginia's road system will be shifted from those who drive gasoline-powered cars on those same roads to consumers in general, who, it is noted, already share the burden.

Step 3 is to raise the vehicle registration fee by $15. OK, fine. I could quibble that the increase is the same for a light compact car that doesn't cause much wear on the roads as for a heavy SUV that does, but that's a minor issue.

Step 4:

Impose a $100 annual Alternative Fuel Vehicle Fee and dedicate the revenues to transit: The governor is a strong supporter of alternative fuel vehicles. (snip) . . . Drivers of alternative fuel vehicles that use natural gas or electricity pay no motor fuels tax at the state or federal level and thus do not contribute to the primary means of funding roads. However, these vehicles still have the same impact on Virginia's roadways as conventional fuel vehicles.

So obviously the solution is to eliminate the burden for conventional fuel vehicles and shift the entire burden to alternative fuel vehicles.


But of course, the governor is a strong supporter of alternative fuel vehicles!

 

[Babbylonian]

Scum. Truly. That reads like he's on the oil industry's payroll.

ETA: In the interest of being specific, it can't make sense to anyone to eliminate the state gas tax as an effort to improve roads. I can understand not wanting to increase it (though I wouldn't agree with it), but a sensible proposal would retain the gas tax and increase other taxes/fees by a smaller amount.

The extra tax on non-gas-powered vehicles is just plain stupid in every way.

 

[WildCat]

I don't see the problem with that. Everything bought at the retail level has to travel on roads, even if you don't have a car you still use roads and are dependent on them.

As for the tax on non-gas cars, why not? They use the roads too, that $100 closes some of the gap of revenues lost from not paying a federal gas tax.

As for no difference between SUV and car taxes a 5,000 lb SUV doesn't really tear up the road designed for 80,000 lb trucks any more than a 3500 lb car does. It's the heavy vehicles that tear up the roads.

IMHO all of the states will have to do similar as electric and high-mileage cars come on market. Some are considering a mileage tax based on sensors in the road and your car so they can track not only your miles but also your location, which IMHO is far more intrusive than a sales tax.

 

[Puppycow]

As for the tax on non-gas cars, why not? They use the roads too, that $100 closes some of the gap of revenues lost from not paying a federal gas tax.

And conventional-fuel vehicles should get off scot-free even though they use the roads too?

 

[Brainster]

How about if the alt-fuels folks just admit that they are destroying the planet's climate, albeit at a slower rate than other evil humans, and that they must set an example for all of us? Eliminates the argument that they are just gas-tax dodgers and establishes once and for all that they are sincerely committed to reducing co2 in the atmosphere.

 

[Lowpro]

Um actually if you read the reasoning it makes more sense. You see the taxes as a punishment towards alternative fuel use and a "benefit" of fossil fuel use but honestly he seems to be just adapting to the changing market. Fossil fuel cars use less gas per mile (or so they say) so that the tax needs to be reattenuated. Natural gas vehicles do not pay this tax that oil-based gas cars do yet they use the same roads that the oil-based gas cars are being taxed for so they need to contribute somehow.

It seems to be the product of proper strategical analysis rather than a douchebag.


From the same source:

Impose a $100 annual Alternative Fuel Vehicle Fee and dedicate the revenues to transit: The governor is a strong supporter of alternative fuel vehicles. He has directed that Virginia's state fleet be converted to natural gas vehicles. And he knows that alternative fuel vehicles will only continue to grow in popularity and use in the years ahead. In fact, over the past four years, as gas prices have grown from less than $2 per gallon to as high as $4, more Virginians have turned to alternative fuel vehicles. There are over 91,000 of these vehicles currently registered in Virginia. This is a great development for energy security and conservation, but it does present a challenge to how transportation funding has been derived in America for the past century. Drivers of alternative fuel vehicles that use natural gas or electricity pay no motor fuels tax at the state or federal level and thus do not contribute to the primary means of funding roads. However, these vehicles still have the same impact on Virginia's roadways as conventional fuel vehicles.

While the governor's plan will eliminate the Virginia gasoline tax, the federal gas tax of 18.4 cents will remain and with more alternative fuel vehicles on the road, the less of a share Virginia will get of those federal gas tax revenues. Therefore, the governor's plan proposes an additional $100 fee for alternative fuel vehicles to ensure that these drivers continue to contribute something to Virginia's transportation networks, which they use every day. The revenues generated by this fee will be dedicated to the Commonwealth Mass Transit Fund to help fund the growing demand for transit and reduce congestion. Legislation passed during the 2012 session already required a fee for electric vehicles, and this measure applies the increased fee to all alternative fuel vehicles.

So he's bringing alternative fuel vehicles in line with all other vehicles and at the same time restructuring how oil vehicles pay (folding their specific tax into the SUT) and because alternative fuel cars effect federal funds the same 100 dollar fee will offset reduced funds.

Where is the diabolical-ness in this? If anything it sounds like their Governor seems to be doing what a good strategist would; adapting to change.

 

[Cain]

I don't see the problem with that.

Then you may want to spend at least five seconds thinking about it.

Everything bought at the retail level has to travel on roads, even if you don't have a car you still use roads and are dependent on them.

I'm sure you consistently apply this sort of reasoning to all taxes and spending. Never mind transportation costs are already incorporated into prices consumers pay for those "retail level" goods and services. What's not being accounted for is that people who use the roads more.

As for the tax on non-gas cars, why not?

Sure, tax cars for their externalities, but don't create dumb incentives, especially if you're going to axe the gas tax.

 

[TragicMonkey]

Obesity costs the state millions in health costs. Clearly the solution is to eliminate the sales tax on fast food and increase the tax on vegetables.

 

[Lowpro]

Obesity costs the state millions in health costs. Clearly the solution is to eliminate the sales tax on fast food and increase the tax on vegetables.

Seriously does anyone here actually read the website? These aren't fees levied in an attempt to stimulate or deter either kind of fuel; they reassessed income and expenditures. They folded IN the taxes on oil fuels into the SUT...

You guys...you used to be smarter than this.

 

[Dr. Keith]

Seriously does anyone here actually read the website? These aren't fees levied in an attempt to stimulate or deter either kind of fuel;

But is intent really the point? The effect of reducing fuel taxes is that fuel efficiency becomes less important. If I am in the "delivering goods to market" business the extra fuel tax makes me strive harder for increased fuel efficiency in my business. If the tax is moved from fuel to the SUT then I have less incentive to worry about fuel efficiency. The goods are taxed on value, which is less indicative of their impact on the infrastructure or environment.

Frankly, it is a bit of a socialist move . . . which is sort of funny as I assume the guy pushing for it is a market loving republican, yet he is ignoring the useful aspects of the market.

they reassessed income and expenditures. They folded IN the taxes on oil fuels into the SUT...

Which reduces incentives to strive for greater fuel efficiency.

The fuel tax is intended to put the cost of driving back on the person paying for the driving. Electric and NG vehicles do create an issue, which the registration fee helps to address and a usage fee based on mileage would address better, but removing the fuel tax is just counter intuitive to anyone wanting to reduce pollution or use the market to allocate the externalities of driving.

You guys...you used to be smarter than this.

Not in my tenure.

 

[Lowpro]

Well there are two issues I have with the fuel efficiency argument:

In the same scenario you would want to deliver goods to the market with as much efficiency of fuel use anyways; taxing it would just exacerbate the incentive. But removal of the tax was not directly meant to communicate a message saying "go on a fuel bender guys!" they dropped it because it was archaic; they probably (I stress probably because I wasn't in the discussion room with them...) analyzed the SUT tax and attenuated the additional 0.8% to the removal of the old 17.5 cent fuel tax. Because the SUT is a sales tax I am inclined to assume that even alternative fuel vehicles pay this tax but I am not sure. So both alternative fuel and regular oil-based fuel consumers pay into this 0.8% more.

I know that taxes will shift behaviors and economic strategies though I'm not blind to that but again I just don't think the shift in taxes is meant to communicate which strategies companies should lean towards; call me naive but I think it's safe to take them at face value that they're being shifted to adapt to the newer automobile environment.

Because of that the removal of the tax (which doesn't seem to be designed to reduce pollution anyways) shouldn't be communicated as an incentive/preventative measure towards pollution. It seems that Virginia has other programs for that; in the same webpage it makes mention of the state's use of alternative fuel vehicles for example. These taxes (and their removal) aren't really a part of an alternative fuel/pollution prevention program it seems, they never were. Using them in an argument framed in such a way as to attack (poor) environmental policies seems...wrong.

 

[Puppycow]

Um actually if you read the reasoning it makes more sense. You see the taxes as a punishment towards alternative fuel use and a "benefit" of fossil fuel use but honestly he seems to be just adapting to the changing market. Fossil fuel cars use less gas per mile (or so they say) so that the tax needs to be reattenuated. Natural gas vehicles do not pay this tax that oil-based gas cars do yet they use the same roads that the oil-based gas cars are being taxed for so they need to contribute somehow.

I highlighted the part makes no sense. Why does the fact that the gas tax brings in less revenue than it used to mean that it needs to be eliminated or "reattenuated"? It really ought to be raised if anything to encourage more conservation.

It seems to be the product of proper strategical analysis rather than a douchebag.

Except a "strategical analysis" that completely ignores the perverse incentives and the consequences of encouraging the burning of more fossil fuels. Have you heard that 2012 was the hottest year on record in the US by half a degree? And near the that there were 11 weather disasters that caused over a billion dollars of damage each? Where does that fit into this "strategical analysis"? How about the record heat wave in Australia? Have you heard about that?

Where is the diabolical-ness in this? If anything it sounds like their Governor seems to be doing what a good strategist would; adapting to change.

It's a dick move because it makes a very important problem for the world worse. It's a dick move because it smacks of willful ignorance and spite.

McDonnell has been very vague about whether he even accepts that man-made global warming is real, but it's deeds rather than words that reveal his true position.

Look at his record:

While prior administrations in Virginia, namely that of Gov. Tim Kaine (D), were quite proactive about studying climate change, Gov. Bob McDonnell (R) has said in public that he does not believe human activity is influencing the earth’s climate. His administration also shuttered Gov. Kaine’s climate change commission, which had produced numerous reports on the threats posed to the state by sea-level rise and warmer temperatures.

Ever since then, the Virginia Department of Environmental Quality has been pushed by the legislature to stop using the scientific terms “climate change” or “sea-level rise,” swapping them for “coastal resilience,” Laura McKay, director of coastal zone management programs, told the Pilot.

McDonnell’s attorney general, Ken Cuccinelli, also embarked on a witch hunt for research errors at the University of Virginia by attempting to force University president Teresa A. Sullivan to turn over scientists’ records and internal communications. The state’s Supreme Court ultimately sided with Sullivan earlier this year, but she’s since announced plans to resign due to an unspecified “philosophical difference of opinion.”

Now you can add this latest proposal to the list.

 

[TragicMonkey]

FYI Virginia has been discounting property tax on cars for years. You get a bill showing what it "should" be, then it shows the discount and what they actually want you to pay. Virginia's roads suck, but they make little effort to fix them using the means they already have.

The voters don't help, of course. They reject any ballot measure to fund transportation projects. Hampton Roads depends on some very old and creaky tunnels, but voted down a miniscule sales tax increase to build new ones.

 

[Lowpro]

I highlighted the part makes no sense. Why does the fact that the gas tax brings in less revenue than it used to mean that it needs to be eliminated or "reattenuated"? It really ought to be raised if anything to encourage more conservation.

Was the tax created in an effort to promote conservation or was it just meant to provide funds for infrastructure? I said it before and you might not have read it but it seems the removal of the tax was reattenuated with a 0.8% increase for the SUT because the 17.5 cent tax was archaic and didn't meet it's design anymore (was its design targeted towards conservation? I don't know I really don't)

Except a "strategical analysis" that completely ignores the perverse incentives and the consequences of encouraging the burning of more fossil fuels. Have you heard that 2012 was the hottest year on record in the US by half a degree? And near the that there were 11 weather disasters that caused over a billion dollars of damage each? Where does that fit into this "strategical analysis"? How about the record heat wave in Australia? Have you heard about that?

Hey slow your roll. I don't even see why climate change is a major factor at all in the discussion here. If the entire tax change was meant to meet infrastructure then climate change isn't part of the discussion. I mean far be it from me to also bring up in the same webpage you linked the efforts to redirect funds towards public transportation too...

It's a dick move because it makes a very important problem for the world worse. It's a dick move because it smacks of willful ignorance and spite.

I think it was neither meant to communicate spite towards the environment. As far as ignorance goes for all we can tell its purpose was purely for infrastructure demand and environmental initiatives are handled separately. Remember in that same webpage it makes mention of the state's move to use alternative fuel cars. That move wasn't made under the pretense of infrastructure funds it was made separately as an initiative to use alternative fuel cars.

McDonnell has been very vague about whether he even accepts that man-made global warming is real, but it's deeds rather than words that reveal his true position.

Look at his record:



Now you can add this latest proposal to the list.

Adding this to the list would be like saying I hate Koi because I didn't spend money to build a Koi pond in my backyard. McDonnell may not agree with global warming being anthropocentric in nature, he may not agree that it exists. But dammit the entire logos of this change seems to be related to infrastructure (targeting the people who use said infrastructure). Your argument does little to connect this with suppositions of McDonnell's concerns or lack thereof for the environment. It's a little CT to me. Or maybe he's really villainous in which case I'd like to see his secret volcano lair...

 

[The Central Scrutinizer]

I don't see the problem with that. Everything bought at the retail level has to travel on roads, even if you don't have a car you still use roads and are dependent on them.

As for the tax on non-gas cars, why not? They use the roads too, that $100 closes some of the gap of revenues lost from not paying a federal gas tax.

As for no difference between SUV and car taxes a 5,000 lb SUV doesn't really tear up the road designed for 80,000 lb trucks any more than a 3500 lb car does. It's the heavy vehicles that tear up the roads.

IMHO all of the states will have to do similar as electric and high-mileage cars come on market. Some are considering a mileage tax based on sensors in the road and your car so they can track not only your miles but also your location, which IMHO is far more intrusive than a sales tax.

Plus, it makes hippies cry. All the more reason to favor it.

 

[zeggman]

My solution would be simply to roll "miles driven" into the vehicle registration fee. I don't know how they do things in Virginia, but here in California we have a "smog check" every two years. Even if they don't already have a similar program in VA, they could require an odometer check once a year when vehicle registration takes place, and assess some "infrastructure" tax then based on miles driven from the year before.

Yes, it would also have the effect of eliminating the gas tax, but it still seems more sensible to me. Maybe use some multiple of vehicle weight and miles driven to determine the tax.

 

[Lowpro]

Man I still feel like we're crossing two separate ideologies with that zeggman. The smog check is part of an emissions standard initiative; it's not meant to collect funds to and direct them specifically to transportation infrastructure like the Virginia gas tax was meant to do.

However they might have been able to use an odometer-check program to tax based on miles driven. They didn't but maybe it could have been an option (or maybe it couldn't have)

This mentality that alternative-fuel car drivers are being penalized seems wrong though. I could use that same rationale to say that they are penalizing the state by restricting federal funding towards transportation (it's appropriated by the use of oil-based cars and alternative-fuel cars don't qualify).

It's wacky either way but labeling the fee as a "penalty" implies that alternative fuel car drivers are doing something wrong; they aren't and trying to call it a penalty is spin.

 

[Random]

My solution would be simply to roll "miles driven" into the vehicle registration fee. I don't know how they do things in Virginia, but here in California we have a "smog check" every two years. Even if they don't already have a similar program in VA, they could require an odometer check once a year when vehicle registration takes place, and assess some "infrastructure" tax then based on miles driven from the year before.

Yes, it would also have the effect of eliminating the gas tax, but it still seems more sensible to me. Maybe use some multiple of vehicle weight and miles driven to determine the tax.

But that’s the beauty of the fuel tax. Heavier vehicles use more fuel. Vehicles that travel more miles use more fuel. Rating for weight and distance traveled is built in.

As for this proposal, I haven’t lived in Virginia since the 80’s but I would oppose this. Raising the sales tax to pay for roads while eliminating the fuel tax ends up charging non-drivers to subsidize drivers. I normally take public transportation home, and if I need to go grocery shopping, I get off one stop earlier, do my shopping, then walk the rest of the way home. Under this proposal, I would end up paying more for my groceries, while a person who drives to the store would pay more for their groceries, but less for the gas they used to get to the store.

I understand that people using electric or hybrid cars has reduced fuel tax income, but that is not a reason to drop the fuel tax. It’s practically invisible, and could easily be raised.

 

[zeggman]

Man I still feel like we're crossing two separate ideologies with that zeggman. The smog check is part of an emissions standard initiative; it's not meant to collect funds to and direct them specifically to transportation infrastructure like the Virginia gas tax was meant to do.

However they might have been able to use an odometer-check program to tax based on miles driven. They didn't but maybe it could have been an option (or maybe it couldn't have)

This mentality that alternative-fuel car drivers are being penalized seems wrong though. I could use that same rationale to say that they are penalizing the state by restricting federal funding towards transportation (it's appropriated by the use of oil-based cars and alternative-fuel cars don't qualify).

It's wacky either way but labeling the fee as a "penalty" implies that alternative fuel car drivers are doing something wrong; they aren't and trying to call it a penalty is spin.

I confess, I'm one of the people who hasn't read the website, and I also haven't understood the explanations of it you've posted here. It seems to me that if alternative fuel drivers are expected to pay a fee which gasoline drivers aren't, that penalizes the alternative fuel drivers unfairly.

I wasn't proposing that the smog check "emissions control" agenda be merged with the "infrastructure maintenance" agenda. I just know that here, recording odometer mileage is part of the smog check, and it seems reasonable to make use of that information to lay the burden of infrastructure maintenance on the people who are using that infrastructure.

 

[zeggman]

But that’s the beauty of the fuel tax. Heavier vehicles use more fuel. Vehicles that travel more miles use more fuel. Rating for weight and distance traveled is built in.

But it's only built in for people who buy the taxed fuel. Since it presumably wouldn't be feasible to tax similarly the electricity used to charge electric vehicles, taxing weight times miles driven seems like the most equitable solution for all drivers. ETA: Actually, a "higher horsepower" engine also consumes more fuel, without adding wear and tear to the infrastructure, so I think my proposal would be MORE fair than a gas tax.

Of course, bicycle riders and pedestrians are still getting a free ride...