Virginia could become the first state to eliminate its gasoline tax if the state legislature votes to adopt Gov. Bob McDonnell’s alternative plan, which calls for raising the state sales tax and imposing additional vehicle registration fees in order to pay for roads throughout the state.
“We simply cannot continue to do what we have always done and expect this problem to go away,” McDonnell told the press. “The gas tax is a stagnant revenue source, and no changes to it will provide a reliable growth mechanism for transportation in the state.”
Under the plan, Virginia’s 17.5 cents-per-gallon gas tax — one of the lowest in the United States — would be eliminated, and the sales tax would be raised by 0.8 percent, with more sales tax revenue going towards transportation.
Additionally, drivers would pay an additional $15 annually in vehicle registration fees, while alternative fuel vehicle drivers would pay additional $100 fee that would go to transit system improvements.
McDonnell’s proposal is estimated to generate $884 million annually — $3.1 billion in funding for transportation over five years. The governor also estimates that $1.8 billion would go to highway construction over five years.
As cars become more fuel efficient and more drivers switch to electric or plug-in hybrid vehicles, revenues from gasoline purchases have fallen, and it has become harder for some states to pay for roads and highways.
Other states have also been debating new policies to replace lost gas-tax revenues. For example, Oregon is considering imposing a charge on high-mileage vehicles that get 55 miles per gallon or more, as a way to recover gas-tax revenue. (RELATED: Read more about the Oregon proposal)
And Washington state will begin charging electric cars owners an $100 annual fee to recover gas-tax revenues.
However, taxpayer advocates worry that the plan could become hijacked in the legislative process and turned against the interests of taxpayers.