Virginia may start an end to gas taxes

Consumption, revenue fizzle

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States have struggled in recent years to fund road-building as revenue from the longtime gas-tax model comes up short. Analysts attribute the declining revenue to the growing popularity of vehicles that run on alternative fuel and that get more mileage.

Mr. McDonnell’s plan calls for eliminating the state gas tax of 17.5 cents per gallon, which already is about 30 cents lower than the national average. The state tax on diesel fuel would remain in effect, as would the federal gas tax of 18.4 cents per gallon.

The plan also would hike the state’s vehicle registration fee by $15 and tack on a $100 fee for alternative-fuel cars, the rationale being that their drivers “pay no motor fuels tax at the state or federal level and thus do not contribute to the primary means of funding roads,” according to the governor’s office.

Mr. McDonnell also is counting on funding from the federal tax on Internet commerce to reach the $3.1 billion figure. That is a hefty sum for badly needed road construction and repairs, but Mr. Cohen worries that eliminating the gas tax will weaken the argument for highway improvements.

“The problem with replacing it with the sales tax is that you’re disconnecting the whole ‘user-pay’ principle,” Mr. Cohen said. “Highway users are proud. We’re willing to pay our own way and don’t really want to be subsidized. If you take that away, we’re just another special interest looking to the state legislature for money.”

Critics argue that a simpler solution would be to index the gas tax to inflation, which several states do. Among the states that have not raised their gas tax rate in two decades or more are Virginia, Massachusetts and New Hampshire.

Virginia also does not allow local governments to levy their own gas taxes in order to fund county and city road projects.

In Maryland, the idea of allowing counties to impose their own gas taxes was broached by the Senate president last week. Sen. Thomas V. Mike Miller Jr., Prince George’s Democrat, proposed allowing counties to levy up to 5 cents per gallon on top of the state gas tax, which hasn’t been increased since 1992.

Jerry Taylor, senior fellow at the free-market Cato Institute, said he favors eliminating the federal gas tax and replacing it with a system of toll roads, which offer a more direct link between user and fee.

“You can make the argument that state dollars are fungible and dedicated charges are a nice fiction, and since the gas tax is not a very precise way to charge for road use, to heck with the whole process,” Mr. Taylor said. “But the idea that the people who use the roads should pay for them is a good one.”

The biggest beneficiaries of Mr. McDonnell’s plan presumably would be residents of the District, Maryland and North Carolina who would be able to fill their tanks on the cheap with a trip to Virginia without necessarily incurring the state’s higher sales tax.

Virginia’s gas tax is already lower than those of Maryland and the District, which charge 23.5 cents per gallon of gasoline, according to the Federal Highway Administration.

“I live in the District, and I guess I would buy my gas out of state if that happened,” Mr. Cohen said.

This article is based in part on wire service reports.

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