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Senator proposing increase in gas tax

Date published: 11/17/2012


State Sen. John Watkins has fired the first volley in an expected General Assembly debate over transportation funding.

Watkins, R-Chesterfield, unveiled on Thursday a wide-ranging proposal to increase state funding for transportation by adding a sales tax to gasoline, lowering some income tax rates and eliminating certain tax exemptions.

Lawmakers from the Fredericksburg area say they do expect transportation to be a big issue in the 2013 legislative session, and that members of both houses are working on proposals. But Watkins' idea, they say, is one of many, and unlikely to survive the legislative process in its current form.

Transportation funding has been a problem in Virginia for years. Thanks to better-mileage cars, hybrids and the fact that Virginia's gas tax is a flat rate, the buying power of the gas tax has decreased over time. Meanwhile, the cost to build and repair roads has increased. By now, Watkins said, the state is shifting $450 million that would have gone to road construction into road maintenance instead.

For years legislators have argued over how to get more money into transportation. Those arguments have led to more public-private projects, bonds and other ways of getting money, but have never led to the kind of major revenue increases that many Democrats and some Republicans favor. Proposals to raise the gas tax have regularly failed.

"The time has come that we must revisit the dedicated revenue stream and provide for future maintenance and construction needs," Watkins said in a written statement introducing his proposal to the Senate Finance Committee at its annual retreat this week.

He would add a 5 percent sales tax on gasoline at the wholesale level; reduce state income tax rates on those making less than $17,000 a year; and end several tax credits and sales-tax exemptions, including credits for having clean-fuel vehicles and sales-tax exemptions for car repairs and taxi services.

Virginia taxes gas at 17.5 cents a gallon--a rate unchanged since 1986--but doesn't impose a percentage sales tax on gasoline.

Watkins estimated that about 30 percent of the proposed sales tax would be paid by out-of-state motorists. Overall, his proposal would generate about $734 million a year in additional money for transportation.

According to the Richmond Times-Dispatch, the 5 percent sales tax on gasoline would equate to about a 14-cent increase in the gas tax.

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