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An Open Letter to the Virginia House of Delegates Finance Committee: Oppose Gov. McDonnell’s Costly Tax Hike Plan

January 23, 2013

Dear Legislator:

On behalf of the National Taxpayers Union’s 9,300 members in the Commonwealth of Virginia, I urge you to oppose Governor McDonnell’s transportation funding plan that would eliminate the 17.5-cent-per-gallon gas tax and impose significant hikes on the sales tax and vehicle registration fees – a scheme that would reel in billions in additional tax revenue.

Under the Governor’s proposal, the Virginia sales tax would jump from 5 to 5.8 percent, car registration fees would spike $15, and Virginians with cars that run on alternative fuels would be hit with a brand new $100 fee. In truth, these new “fees” are actually taxes because they would not be dedicated to road construction, but instead would fund mass transit projects, such as a building passenger rail between Lynchburg and Roanoke and lengthening the Norfolk light rail service into Virginia Beach. An additional $300 million would be set aside for the Metro’s Silver Line, a costly project that began nearly four years ago.

Yes, Virginia’s transportation financing is in desperate need of restructuring, but McDonnell’s plan is a burden-shifting tax hike at its core. Not to mention, it relies on Congressional passage of dangerous online sales tax legislation to reach even deeper into Virginia taxpayers’ wallets to the tune of $1.1 billion. Banking on the so-called Marketplace Equity Act would make Virginia part of a predatory tax collection scheme that will ultimately hurt small Internet-based businesses and, undermine the principles of tax competition that have benefitted the Commonwealth.

Governor McDonnell’s plan thankfully avoided an income tax boost, but there are other positive approaches that could be taken instead of his burden-shifting sales tax hike. The way in which Virginia’s transportation funding is allocated should be given more attention, and lawmakers should look to strengthen public-private partnerships made possible through the Public Private Transportation Act (PPTA) of 1995. Thanks to the PPTA, the $1 billion I-95 Express Lanes project, which began in July 2012, required only $70 million in state funding. Policymakers should increase the number of these partnerships in the Commonwealth, which have saved the State billions of dollars and years of construction time.

Instead of implementing this burdensome tax hike, our members hope that lawmakers will pressure the Governor to support pro-growth policies like those proposed by leaders in Louisiana, Kansas, and Nebraska. With no tax relief from Washington, D.C. in sight, this would be an especially dangerous time for a major tax increase.


Lee Schalk
State Government Affairs Manager


cc: Governor Bob McDonnell