Tuesday, November 20, 2001

Virginia’s car tax has proved to be like most other taxes difficult, if not impossible, to get rid of. Last week, outgoing Virginia Gov. James S. Gilmore who was elected on a promise to repeal the tax announced that a revenue shortfall will require an indefinite postponement of the remainder of the scheduled repeal. The tax had been scaled back by 70 percent already, saving Virginia taxpayers an estimated $570 million. But it will continue to afflict taxpayers each year, albeit at just 30 percent of the listed value of a vehicle instead of the original 100 percent. That’s better than nothing, of course. But the continued existence of the car tax, even in watered-down form, remains a threat to Virginians because it’s much easier to raise an existing tax than it is to pass an entirely new levy. And, with a tax-and-spend Democrat on his way to the governor’s mansion, the only remaining firewall against an expanded car tax will be the resolve of state lawmakers.
Early indicators are less than reassuring. “No amount of smoke and mirrors can finance full car-tax relief next year. It’s a dead issue,” gloated Virginia Delegate Vincent F. Callahan Jr. Although a Republican, Mr. Callahan, the incoming chairman of the Virginia House Appropriations Committee, has been among Mr. Gilmore’s harshest critics on the car-tax issue, taking side with the “needs” of the state however expansive over the right of Virginians to keep the money they earn. Democratic Delegate Robert D. Hull of Falls Church, meanwhile, said he is “glad to see that fiscal sanity has hit the governor’s office, because it was clear that revenues are dropping considerably.”
Fiscal sanity? Virginia’s budget has hardly been trimmed to the bone. In fact, as Peter Ferrara of the Virginia chapter of Americans for Tax Reform has observed, state spending has increased by 42 percent over the past four years. Mr. Ferrara argues that “all they need to do is retrench a small part of that increase.”
This was also the argument that Mr. Gilmore steadfastly put forward prior to his announcement last week. It’s a credible argument, and it’s a shame that Mr. Gilmore dropped the ball on this issue. He could have left it to incoming Gov. Mark Warner to explain to taxpayers why the state can increase its spending by more than 40 percent, yet it can’t find a way to let Virginians escape the remaining 30 percent of the car-tax hit.

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