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Repeal the Transportation Tax Hike!
An Open Letter to the Virginia General Assembly
January 14, 2014
On behalf of National Taxpayers Union’s (NTU’s) 9,300 members in the Commonwealth of Virginia, I urge you to repeal HB 2313, the $5.9 billion transportation tax increase passed by the General Assembly last year. This hike is a “lose-lose” for taxpayers and the state economy, and signals that elected officials are unwilling to rein in state spending, which ballooned by 94 percent—from $22 billion to $43 billion annually—between 2000 and 2012.
The new law increased the Virginia sales tax from 5 to 5.3 percent (6 percent for Northern Virginia and Hampton Roads), implemented a 3.5 percent wholesale gas tax and 6 percent tax on diesel fuel, and raised car registration fees. In truth, these new “fees” are taxes, as they are not dedicated to road construction. Rather, they will fund mass transit projects, such as passenger rail between Lynchburg and Roanoke, the Norfolk light rail, and Metro’s Silver Line, a costly project that began over four years ago.
While Virginia’s transportation financing is in need of restructuring, the $5.9 billion package follows the wrong approach by raising taxes on all Virginians and unfairly shifting the burden of taxation. Additionally, it relies on Congressional passage of dangerous online sales tax legislation to reach even deeper into Virginia taxpayers’ wallets, (at an estimated $1.1 billion). Encouraging adoption of the so-called Marketplace Fairness 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. To better protect taxpayers from this provision, lawmakers should support HB40, introduced by Delegate Bob Marshall, which would repeal the automatic 46 percent fuel tax increase that will occur if Congress does not pass the Marketplace Fairness Act in 2014.
As for infrastructure improvements in the Commonwealth, there are other positive approaches that could be taken while avoiding unfair tax hikes. For example, the way in which Virginia’s transportation funding is allocated (with an excessive proportion devoted to transit) should be given more attention. Additionally, 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 billions of dollars and years of construction time.
Last year, legislators in eighteen states passed tax cuts for their constituents, according to a recent report by the American Legislative Exchange Council. Unfortunately, Virginia moved in the opposite direction by raising taxes. Our members in the Old Dominion hope that lawmakers will repeal the $5.9 billion tax increase and support pro-growth policies instead, such as the income tax cuts recently enacted in neighboring North Carolina. As we begin 2014 with a still-soft economy, higher health care costs, and no tax relief from Washington, D.C. in sight, Virginians are looking to leaders in Richmond to reduce their heavy burden of taxation.
Sincerely,Lee SchalkState Government Affairs Manager
cc: Governor Terry McAuliffe