Thanks to leaders in the Virginia House and Senate, Governor McDonnell’s transportation funding scheme has gone from bad to worse. Just weeks ago, I detailed why McDonnell’s billion dollar tax hike was a bad idea. Here’s how it just got worse.
Instead of scrapping the gas tax, the plan now includes a 3.5 percent wholesale gas tax and a 6 percent wholesale tax on diesel fuel. Additional car taxes abound – a $100 annual “fee” for Virginians with cars that run on alternative fuels and a motor vehicle sales tax hike from 3 to 4 percent. All retails sales will be taxed at a higher rate of 5.3 percent (the current rate is 5 percent).
In order for McDonnell and his cronies to make this multi-billion dollar tax hike a reality, they are relying on Congressional passage of dangerous online sales tax legislation to reach even deeper into taxpayers’ wallets. Passage 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.
But what if this federal legislation fails to become law? Well, then taxes are going up…again. The latest proposal states that if the Marketplace Fairness Act fails, the wholesale gas tax will jump from 3.5 to 5.1 percent.
Governor McDonnell’s plan thankfully avoids an income tax boost, but given the bevy of tax increases it includes, this plan must be adamantly opposed by Virginia taxpayers. As leaders in states like Louisiana and North Carolina seek pro-growth, revenue-neutral tax reform, it is especially disconcerting to see Richmond pushing a 5-year, $6.1 billion tax increase.