Yesterday we released an independent report (PDF) analyzing Nevada Governor Brian Sandoval’s proposed Business License Fee tax. The proposal replaces Nevada’s current $200-flat business license fee with a tiered gross...
- The Tax Policy Blog
- Virginia May Consider Gasoline Tax Increase
Virginia May Consider Gasoline Tax Increase
In FY 2013, the Virginia state government is expected to spend around $4.9 billion on transportation, including some $4.1 billion on roads. However, the state gasoline tax of 17.5 cents per gallon will raise just $961 million; other road- and vehicle-related state taxes raise another $1.3 billion. No matter how you slice it, Virginia is spending way more on transportation than it raises in state transportation-related taxes, with the difference made up by federal aid and general state tax revenue. And all this is before you take into account the seeming bipartisan state consensus that the state isn’t spending enough now on transportation.
Governor Bob McDonnell (R-VA) has recently hinted that he isn’t oppose to raising the state’s gasoline tax, and a recent poll found Virginia voters want more spending on transportation although they would prefer tolls to higher taxes. The gas tax is attractive because it might get bipartisan support, and Virginia is surrounded by states with higher gas taxes (North Carolina, to the south, is nearly twice that of Virginia.)
This chart shows why Virginia’s gasoline tax revenues are inadequate at meeting the state’s annual road spending needs. It plots Virginia’s gasoline tax since it was created in 1923 to today, two ways. The bottom line is the tax rate in nominal cents, from when it started at 3 cents per gallon to today’s 17.5 cents per gallon. The other line puts the tax rates in today’s dollars: so while today’s gas tax is still 17.5 cents, that 1923 rate was worth 40 cents in today’s money. Looking at it this way, the Virginia gas tax is at a historically low rate, having peaked in the Great Depression at the modern-day equivalent of 89 cents per gallon. (Coincidentally, if you raised all of Virginia’s current transportation spending from the gasoline tax, that would require a rate of 89 cents per gallon.)
Subscribe to the Tax Foundation Newsletter
We will never sell or share your information with third parties.
Join the Tax Foundation's fight for sound tax policy Go
About the Tax Policy Blog
The Tax Policy Blog is the official blog of the Tax Foundation, a non-partisan, non-profit research organization that has monitored tax policy at the federal, state and local levels since 1937. Our economists welcome your feedback. If you would like to send an e-mail to the author of a blog post, please click on that person's name to locate his or her e-mail address or visit our staff page here.