- The Washington Times - Friday, March 3, 2006

RICHMOND — As budget negotiations get under way this weekend, the state Senate is driving to increase the gasoline tax — the region’s lowest, at 17.5 cents a gallon for the past 20 years.

“I’m not afraid of [raising the gas tax],” said Senate Finance Committee Chairman John H. Chichester, Stafford Republican and one of five Senate budget negotiators. “People talk about [the gas tax] as the only real user fee because it touches everyone using the roads, including those from out of state.

“To me, [increasing] it makes a great deal of sense. Every other proposal we’ve seen, only Virginians pay.”

It doesn’t make sense to House Speaker William J. Howell, Stafford Republican.

“I chuckle when I think of it,” Mr. Howell said. “It is the wrong time to raise gas taxes on the public.”

The opposing viewpoints highlight the schism between the House and Senate on taxes and foreshadow the debate on funding transportation projects.

Supporters for increasing the gas tax say its revenues have declined as cars have become more fuel-efficient. A car that gets 20 miles a gallon today produces the same amount of gas-tax revenue as one that got 10 miles a gallon 10 years ago.

“We’re driving an extra 10 miles for the same amount of tax,” said Lon Anderson, director of public and government relations for the automobile club AAA Mid-Atlantic.

Meanwhile, the cost of maintaining and improving the state’s roadways has risen.

The Senate is proposing to raise about $500 million for transportation by taxing the average six-month wholesale gas price by 5 percent.

If applied today, the tax would add about 8 cents per gallon to the cost of wholesale gasoline, said Michael O’Connor, spokesman for the Virginia Petroleum, Convenience and Grocery Association.

Mr. O’Connor said petroleum marketers — some of whom own gas stations — buy wholesale gasoline and would bear the initial brunt of the 5 percent increase, which they would likely pass on to customers.

Wholesale clubs such as BJ’s and Costco also buy wholesale gas and don’t rely heavily on gas profits, Mr. O’Connor said.

“I happen to feel that a gasoline tax is a perfect example of a user fee,” said Senate Majority Leader Walter A. Stosch, Henrico County Republican. “We can’t change the name of it. It’s assessed as a tax, but I can’t think of any better way to recognize that you use the roads more, and you consume more fuel. That’s the best tax.

“Having said that, it’s not politically popular,” Mr. Stosch said.

John Felmy, an economist with the American Petroleum Institute, said it’s “hard to say” what effect the proposal would have on the pump price because of factors such as crude-oil prices, exploration costs, international relations, natural disasters, and local and federal taxes — each of which influences the retail price of gas.

The House proposes funding transportation initiatives with money from the state’s multibillion-dollar surplus.

Mr. Howell said he believes drivers would be saddled with a bigger gas bill under the Senate plan.

“The margin the gas retailers make on selling gas is like 1 [percent] or 2 percent,” the House speaker said. “There is no way in the world they are going to eat a 5 percent increase. You can be sure that every penny of that is going to be passed onto the public.”

But Senate Minority Leader Richard L. Saslaw, a gas station owner, said raising the wholesale tax wouldn’t have a major effect at the pump.

Mr. Saslaw, Fairfax County Democrat, said Virginia gas stations competing for customers on the border with North Carolina, whose gas tax jumped to 29 cents a gallon this year, show how lower gas taxes translate into nothing more than higher profits for oil companies.

“Within a day or two of when [North Carolina’s gas tax increase] went into effect, the jobbers on this side of the North Carolina line saw their wholesale price drift up 12 cents a gallon because oil companies weren’t about to let that kind of disparity sit there,” Mr. Saslaw said.

“Now who is smarter? Us, for not raising the gas tax, and that extra 12 cents goes 100 percent in the oil company’s pocket? Or the people in North Carolina, whose 12 cents did go into their state tax coffers?”

Mr. O’Connor said Mr. Saslaw is “100 percent wrong.”

His group has documented the differences in gas prices between Virginia and North Carolina since the latter’s tax increase kicked in. Mr. O’Connor said the wholesale tax increase would cut into the profits — about 6 percent of the retail price — of the 500 marketers he represents.

“We represent the people whose ox is being gored,” he said, adding that the marketers he represents distribute about 70 percent of the wholesale gas that comes into Virginia.

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