Tax Foundation Answers Legal Questions behind Northern Virginia Transportation Tax Dispute

February 15, 2008

As residents of Northern Virginia begin to pay seven new taxes implemented by a non-elected body, the Virginia Supreme Court is considering whether these new taxes are constitutional. The Tax Foundation released a paper today discussing the legal challenge and highlighting the use of non-legislative bodies to “get around” taxpayer protection statutes.

“The concept of taxation with representation is as American as apple pie,” said paper author and Tax Foundation tax counsel Joseph D. Henchman. “The Northern Virginia Transportation Authority is an unelected body that has imposed $326 million in stealth taxes. Virginia requires tax increases to be passed by a popular vote for a reason, and these types of taxpayers protections should, and legally must, be protected.”

Voters had on several occasions previously rejected the types of taxes imposed by the Northern Virginia Transportation Authority (NVTA), but legislators simply imposed them anyway. This violated three specific constitutional taxpayer-protection provisions, which allow only elected officials to raise taxes and issue debt and only following approval by popular vote.

Legislators circumvented the final constitutional protection designed to prevent “kitchen sink” style omnibus bills by limiting laws to only one subject matter. The phrase “relating to transportation” was added to the title so that the bill would meet the required rule. However, this legislation included, among other things, funding for salaries of professors at Virginia Tech.

“A mere shift in wording should not be enough to overcome constitutional protections,” Henchman continued. “Northern Virginians cannot vote out the NVTA Board as such, and the NVTA should not be able to exercise powers constitutionally denied to other governmental entities.”

Oral arguments were heard by the state Supreme Court on January 8, 2008, after a lower court judge (Judge Benjamin Kendrick) had ruled the NVTA to be constitutional. A ruling is expected in late spring.

The case has broader implications nationwide, as many states have similar forms of taxpayer protections. Many states have been looking for small and subtle ways to increase tax revenues to address budgetary issues, making the likelihood of other such “authorities” appearing much higher.

Read the full report. Read the news release.

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