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Group critical of gas, sales tax ideas
Taxes for transportation would hurt poor, group said
By Chelyen Davis
Date published: 5/9/2008
RICHMOND-- With the governor preparing to unveil his transportation proposal next week, a group yesterday warned that the two types of tax increases being debated by Democrats would both disproportionately hurt the poor.
The Commonwealth Institute for Fiscal Analysis, an arm of the Virginia Interfaith Center for Public Policy, says that raising the gas tax or the sales tax would have a greater impact on low- and middle-income Virginians than on those with higher incomes.
Virginia's gas tax rate is 17.5 cents a gallon, one of the nation's lowest, and it has not been raised since 1986.
Democrats are discussing raising either the gas or sales tax to generate new money for statewide road maintenance. Most Republicans oppose raising either tax.
In a press conference yesterday, Michael Cassidy, the institute's director, said both of those taxes are "regressive." He demonstrated that with a chart showing that lower-income households pay a higher share of sales and property taxes--meaning it takes a bigger percentage of their income--while higher-income households pay a higher share of their taxes on income.
Cassidy's numbers showed that for people making less than $17,900 a year, a 10-cent increase in the gas tax would cost them $32 more a year.
A 1-cent increase in the sales tax would cost that group $67 more a year.
Both taxes would cost higher-income people more in dollars, but less, Cassidy said, in terms of percentages.
Cassidy said that works out to nine times more than the cost to upper-income people.
"As a share of their income, these numbers are quite significant," Cassidy said.
The institute is calling on lawmakers to provide a tax credit for lower-income Virginians to offset the costs if either tax is increased.
The group proposes making Virginia's Earned Income Tax Credit a rebate, instead of just a credit. Alternatively they propose creating a new refundable sales-tax credit, which could be set at a value depending on how much the gas or sales tax is increased, and given to families making under $40,000 a year or single people making under $20,000.
Either credit, Cassidy said, would take about $85 million a year out of the revenues created for transportation by a tax increase.
"We should not be funding a transportation fix on the backs of poor, working Virginians," he said.
Chelyen Davis: 804/782-9362
Email: cdavis@freelancestar.com
Date published: 5/9/2008
Most recent reader comments:
The Commonwealth Institute....
(posted by
gramps
, May 10, 2008 8:14 am)
for Fiscal Analysis/Virginia Interfaith Center for Public Policy sounds like a "front" for SOCIALISM. As such, their position is not worth much of our time.
Someone please explain
(posted by
simonsez
, May 9, 2008 4:12 pm)
Why people don't go to the cheapest stations. When there is 3 or 4 stations within a half mile of each other, with prices 2, 3 or even 5 cents different...then why do people go to them all and not the lowest. So what would 1 penny tax on a gallon do for the roads? And everyone pays, especially out of staters. Its a no brainer...some people don't even look at the price of gas. Are the poor hurting from the Oil Companies raising prices every day?
Nothing is free...
(posted by
Planet
, May 9, 2008 8:51 am)
We must maintain our current roads and build new roads to meet the traffic demands of our rowing population. We must all be willing to pay for that. How much does it cost us in humn lives and injuries and in a lower quality of life and decreased productivity because we are spending hours sitting in traffic jams. I'm sure the $32 a year cited as the cost to lower income persons would be far less than the cost of gasoline burned up sitting in traffic!
It hurts all of us ( lower income people included)
(posted by
Dana1
, May 9, 2008 7:14 am)
when we cannot fix and improve our roads. How much extra gas (money) is it causing people (incl. lower income)when they sit idling in traffic for hours on I-95? We're not suposed to fix roads because some think it will hurt lower income people? It hurts ALL of us to pay and hurts us ALL not to. Higher gas prices hurt us all. Are we now going to ask rich people to subsidize low income earners at the pump? Cassidy's & the Republican argument is ridiculous and as a Republican - I find it embarassing!
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