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Va. Republicans split over gas tax reform plans

Virginia Attorney General Ken Cuccinelli has backed a “conservative” alternative transportation plan that rivals the plan proposed by Republican Gov. Bob McDonnell, which eliminates the state’s gas tax while raising the sales tax and vehicles registration fees.

The Washington Examiner reports that the Cuccinelli endorsed plan would replace the gas tax with sales tax on the wholesale price of gasoline that would rise with inflation. The plan would also eliminate $600 million in proposed fee increases that McDonnell’s plan would entail.

The plan was put forward by state Sen. Steve Newman on Monday — one day before the deadline for passing a transportation plan to the Virginia house. Newman had previously introduced McDonnell’s plan to the Senate, which would raise $3.1 billion for state roads.

“Today, Senate Transportation Committee Chairman Steve Newman is advancing an alternative that I believe has the best chance to get the votes needed to make improvements to Virginia’s transportation system,” said Cuccinelli in a statement.

The plan would lose $20 million in 2014, reports the Washington Post. However, inflation and increases gas costs would raise $500 million to $650 million per year by 2018, including $200 million per year from federal legislation regarding online sales tax collection. This plan, however, is projected to raise $1.2 billion less than McDonnell’s plan.

McDonnell’s office has downplayed the plan, arguing that it is similar to the governor’s plan which shifts a portion of sales tax revenue to roads and factors in online sales taxes. McDonnell spokesman Tucker Martin told the Examiner that the plan “is the broad funding package our transportation system needs to be sustainable in the years ahead.”

“We simply cannot continue to do what we have always done and expect this problem to go away,” McDonnell told the press last month. “The gas tax is a stagnant revenue source, and no changes to it will provide a reliable growth mechanism for transportation in the state.”

However, McDonnell’s plan has already come under fire from Grover Norquist’s taxpayer advocacy group, Americans for Tax Reform.

“[V]oting to index the gas tax to inflation, without any complete offsets, would be in clear violation of the promise you made to your constituents and the people of Virginia to oppose any and all efforts to increase taxes,” Norquist said in a December letter. “For those in Richmond who have signed the Taxpayer Protection Pledge, I would remind you again that this is a clear violation of the commitment you made to your constituents.”

“The plan as it stands now fails in its goal to prioritize transportation spending while avoiding tax increases,” said a later statement from the conservative group Americans for Tax Reform. “At the same time, there is the danger that this plan could become an even worse deal for Virginia taxpayers as it moves through the legislative process.”

“The fact is Virginia does not have a revenue problem; it has a problem prioritizing spending,” ATR concludes.

Cuccinelli is running for governor.

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