Skip to content

Virginia Supreme Court: Giving Power to Tax to an Unelected Body is Unconstitutional

3 min readBy: Joseph Bishop-Henchman

This morning, the Virginia Supreme Court unanimously held that the Northern Virginia Transportation Authority (NVTA) is unconstitutional in Marshall v. NVTA.

The court found that the NVTA, created in 2002 and given the power to taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. in 2007, exceeded its powers when it levied 7 taxes on residents of Northern Virginia. The taxes will have to be refunded in their entirety. They are:

  • Grantors Tax on Home Sales = .40 cents/$100 value
  • Motor Vehicle Rental Tax = 2% of rental rate
  • Transient Occupancy Tax = 2% of hotel rate
  • Safety Inspection “Fee” = $10 annually
  • Sales TaxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. on Auto Repairs = 5% of labor charges
  • Regional Registration “Fee” = $10 annually
  • Initial Vehicle Registration “Fee” = 1% of value

The Tax Foundation had authored a report arguing that the NVTA violated taxpayer protection provisions of the Virginia Constitution, including:

  • Measures to raise taxes or borrow money must be approved publicly by elected officials, with votes recorded. This helps ensure that taxes and borrowing are scrutinized publicly and enjoy a broad range of support beyond that of a narrow special interest.
  • Laws cannot embrace more than one object. “Single-object” or “single-subject” rules are in virtually every state constitution, and they arose in “the 1830s to eliminate the evils of ‘logrolling’ and ‘omnibus bills,’ and to ensure separate consideration by the legislature for distinct proposals.”

The court sided with NVTA on the one-object rule argument. The bill giving the NVTA the power to tax listed a variety of unrelated subjects (including funding professor salaries at Virginia Tech), and at the last minute the phrase “relating to transportation” was added to the title to attempt a veneer of constitutionality. The court held that this empty gesture was sufficient: “Our examination of the subjects included in Chapter 896 reveals that those subjects are congruous and have a natural connection with the subject of transportation expressed in the title.” This effectively nullifies the one-object rule as a restraint on government power.

However, the taxpayer argument regarding the nondelegation doctrine prevailed. First, the court held that all seven assessments were properly labeled as taxes, an argument the Tax Foundation specifically made. “We consistently have held that when the primary purpose of an enactment is to raise revenue, the enactment will be considered a tax, regardless of the name attached to the act…. [W]e conclude that each of the regional taxes and fees provided in Chapter 896 constitutes a tax, because they all are designed to produce revenue to be used for the purpose of financing bonds and supplying revenue for transportation purposes in the Northern Virginia localities.”

Next, the court concluded that the legislature had given total discretion over whether to impose the taxes to the NVTA. “Although the General Assembly can later pass a law to amend or repeal NVTA’s authority to impose taxes, this does not negate the fact that the sole discretion to impose the regional taxes and fees presently rests with NVTA.” Because taxes many only be imposed by the General Assembly, the taxes were therefore void. “The constraints that the citizens of Virginia have placed upon the General Assembly regarding the imposition of taxes would be rendered meaningless if the General Assembly were permitted to avoid compliance with these constraints by delegating to NVTA the decisional authority whether to impose taxes. Thus, although the Constitution does not explicitly prohibit the delegation of such decisional authority concerning the imposition of taxes, that delegation is prohibited by necessary implication, and the General Assembly may not delegate its taxing power to a non-elected body such as NVTA.”

The Court concluded: “[B]y enacting Chapter 896, the General Assembly has failed to adhere to the mandates of accountability and transparency that the Constitution requires when the General Assembly exercises the legislative taxing authority permitted by the Constitution.”

Read the Tax Foundation’s report on the NVTA case here.