February 27, 2013

Bloomberg BNA: Virginia Transportation Package Relies On Federal Sales Tax Legislation for Funding

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(Original Post)
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‘Cobbled Together Package.’

Carl Davis, a senior analyst at the nonpartisan Institute on Taxation and Economic Policy, said the state Legislature approved an unnecessarily “complicated” package for a relatively simple funding issue.

“There are much more straightforward options then this cobbled together package of revenue raisers,” Davis said.

“If Virginia just recognized the fact that construction costs have been growing for last 25 years while the gas tax hasn’t and if they just upped their gas tax to inflation, they could be raising $600 million per year just by updating for inflation alone.”

According to a report by Davis published in December 2011, Virginia would have to raise its gas tax by 14.5 cents to keep up with rising construction costs. Even if indexing the tax to inflation is the more straightforward option, raising the gas tax is politically difficult—Virginia has not increased its state gas tax in 25 years and the federal tax has not risen since 1993. Neither tax is indexed for inflation.



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