Could Virginia be on verge of a fuel tax increase?

By Keith Goble, Land Line state legislative editor | 11/20/2012

A push is underway in Virginia to raise about three-quarters of a billion dollars for road work through higher fuel taxes. An increase at the fuel pump would be an alternative to more toll taxes.

Sen. John Watkins, R-Powhatan, is preparing to prefile a bill for consideration during the upcoming regular session, which would nearly double the state’s fuel tax rate.

If Watkins gets his way, the state’s 17.5-cent-per-gallon tax on gas and diesel would increase to 31.5 cents. In return, residents would get a break on their income tax.

To compensate for the tax breaks, Watkins is calling for the elimination of certain transportation-related tax credits and charging fees to owners of electric and hybrid vehicles.

Unchanged since 1986, the 14-cent increase would generate about $735 million annually to cover road maintenance expenses.

Gov. Bob McDonnell has different plans to boost transportation funding. He has called for charging tolls on Interstate 95 south of Richmond.

Watkins wants to avoid reliance on more toll taxes to pay for transportation funding needs.

“Tolls may have their place on new construction when other options exist for traffic, but the placement of tolls on these facilities, particularly I-95, is not prudent,” Watkins said in a recent letter to constituents. “There are other approaches, and I intended to ensure other options are on the table for consideration by the Legislature.”

Ryan Bowley, OOIDA’s director of legislative affairs, said the fuel tax remains the most efficient option to address funding needs.

“Toll proponents tout supposed benefits to electronic tolling and things of that elk, but they can’t escape the fact they are charging every single vehicle,” Bowley said. “There has to be a huge administrative back end to pay for that.”

More than 90 percent of Virginia voters say it is important to improve roads and highways, according to a Quinnipiac University poll. But there are mixed opinions on whether toll taxes or fuel taxes are the way to go.

Given a choice between the two, the poll shows that voters prefer paying more to access certain roads than paying more for fuel, 56 percent to 32 percent. About the same number – 57 percent – of respondents said tolling portions of I-95 is a bad idea.

“There is broad public support for the idea of state action to improve the state’s roads and highways, but not on how such projects should be funded,” Peter A. Brown, assistant director of the Quinnipiac University Polling Institute, said in a statement.

An unscientific poll on found that 80 percent of respondents prefer higher fuel taxes to tolls.

Watkins’ proposal could be considered during the session that begins Jan. 9, 2013.

To view other legislative activities of interest for Virginia, click here.

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