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The gas tax decreases in Virginia today, but other rates go up to pay for roads.
Monday, July 1, 2013
Motorists should pay a little less at the pump in Virginia today, as a new scheme for taxing gasoline takes effect in the state.
Say goodbye to the state’s 17.5 cents per-gallon excise tax, which has remained stagnant for more than a quarter-century.
It has been replaced with a 3.5 percent tax on the wholesale price of motor fuel under the new transportation funding law passed by the General Assembly. That means drivers filling up in Virginia will save about 6 cents per gallon today, according to AAA Mid-Atlantic.
But don’t get too excited about any extra change in your pockets, because you may need it to cover other tax and fee increases that take effect today to pay for Virginia’s long-neglected transportation needs.
The retail sales tax has increased from 5 percent to 5.3 percent statewide and 6 percent in Northern Virginia and Hampton Roads.
The vehicle titling tax has gone from 3 percent to 4 percent and will gradually increase to 4.15 percent by 2016.
Owners of hybrid vehicles will get slapped with a $64 annual fee, a punishment for not paying enough gasoline taxes.
The higher taxes and fees were woven into a long-overdue transportation funding bill that cleared the General Assembly earlier this year and was signed into law by Gov. Bob McDonnell. In addition to adjusting multiple tax rates, the law anticipates revenue Virginia could generate by collecting sales taxes on out-of-state sales by online and catalog companies. But that won’t happen unless the U.S. House of Representatives passes the stalled Marketplace Fairness Act to give Virginia and other states the authority to collect those taxes.
If no federal law is passed, Virginia’s gasoline sales tax will increase to 5.1 percent in 2015. Neither AAA nor Virginia’s next governor will be issuing press releases to celebrate that.
The transportation bill was the product of a fragile and flawed compromise. But, warts and all, it is the most significant state law taking effect today. It will fund critically needed investments in transportation infrastructure and create a revenue stream that grows with inflation. That will help Virginians more than saving a few pennies at the pump.
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