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Virginia Sees Sense, Scraps 2013's Hybrid Vehicle Tax

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2012 Lexus RX 450h

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Taxes are rarely popular, but if they're to be accepted by the populace the bare minimum they have to do is make sense.

Virginia's annual tax on hybrid vehicles did not make sense. Proposed and enacted early last year, the tax added a fixed yearly sum to the cost of running a hybrid vehicle, in an effort to make up a gas tax shortfall.

This week, the Virginia Senate has voted to repeal the tax, deemed "illogical" by Democrat Senator Adam Ebbin. According to the Roanoke Times (via Autoblog Green), the bipartisan senate voted the bill down by a 35-3 margin.

It means hybrid drivers will no longer have to pay $64 a year for the privilege of owning a hybrid--and will even get advance payments for this year refunded.

Thousands of hybrid owners had signed a petition in the state to repeal the tax, on the basis that several non-hybrid vehicles that achieved better mileage than their hybrids remained untaxed--making the system unfair.

The bill had originally been conceived as a way of making up the state's gas tax shortfall.

While the theory was that more efficient vehicles had caused the shortfall, the reality is that Virginia is one of a number of states whose gas tax has been frozen for decades--since 1986 in this instance.

Accounting for inflation, the 17.5 cents per gallon tax is worth only 8 cents in 1986 dollars--causing a revenue shortfall.

At the time, Governor Bob McDonnell had suggested replacing the gas tax entirely with other fees. With the repeal of the fixed hybrid tax, that looks unrealistic now--and existing Governor Terry McAuliffe said earlier in the week that if the legislature passed a bill to repeal the hybrid car fee, he would sign it.

The move will reduce the state's tax revenue by around $11 million. Republican Senator John Watkins--one of the three to oppose passage--and Sen. Ebbin have both suggested that payment for road maintenance and construction may in future be decided based on miles traveled and vehicle weight--rather than penalizing one type of vehicle.

So Virginians won't escape tax increases entirely--but from now on, it'll be fairer for those driving hybrid vehicles.

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