VA Governor's Road-Funding Plan: Penalize Hybrids, Electric Cars

By Antony Ingram

1,638 views Jan 21, 2013

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Nobody particularly likes taxes, but as they go, gas tax is at least generally fair in how it's applied. The more gas you use, the more you pay. Use less, or none at all, and you pay less--or nothing.

Virginia residents will soon be paying nothing even if they drive gas guzzlers, as Governor Bob McDonnell has proposed dropping the state's gasoline tax, the revenues from which he describes as becoming "stagnant".

The extra revenue must come from somewhere though, so the proposal includes an increase in sales tax of 0.8 cents on the dollar, a $15 registration fee for every new car--and a $100 annual fee for plug-in and hybrid cars (similar to that of Washington state, but penalizing hybrids too), to make up for all that gas tax nobody else will be paying.

McDonnell himself says in the Washington Post that it all hinges on the state's low gas tax, which has remained 17.5 cents per gallon since 1986.

This wasn't indexed for inflation, meaning--in 1986 dollars--it's now worth about 8 cents on the gallon--and not making the state enough money.

Rather than raise tax in line with inflation, McDonnell wants to scrap it entirely, levying fees in other areas to cover the deficit.

While he argues that an increase in sales tax ultimately benefits the transport of everyone--those who use public transport, as well as private vehicles, for example--it's hard not to see the glaring flaw: Owners of gas-guzzlers will pay a lot less to run their vehicles, while those who've deliberately chosen more efficient plug-in and hybrid cars, will instantly pay $100 per year regardless of how much gas they use.

91,000 plug-in and hybrid cars would be affected--and potentially, the sales of many others.

Incidentally, the 17.5 cents per gallon tax will remain on diesel--to maintain revenue from commercial vehicles, as well as unlucky Virginia diesel car drivers, who'll also have chosen their vehicles to reduce costs over the equivalent gasoline car...

Even for those looking forward to reduced gas prices, it's unlikely those 17.5 cents per gallon will go straight back in people's pockets.

As the Washington Examiner highlights, it's likely that oil companies, wholesalers and gas stations will bump up prices to make the most of it--a saving of 10-12 cents per gallon for consumers is more realistic.

The proposed changes could very well improve Virginia's budget, as residents from surrounding states make the journey to VA to save even more on already-cheap gas.

But for owners of electric and hybrid vehicles, it may feel like their decision to drive a cleaner car is going completely unappreciated.

You can read more on the governor's proposals on our sister site, TheCarConnection.

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