The looming budget deal in Richmond will raise sales taxes 20% in Northern Virginia, hike the “grantor’s tax” on real estate transactions by $0.40 per hundred, and hike the sales tax on automobiles by 33%. All this so Richmond can continue to throw money to fix transportation problems where they don’t exist and fail to address problems where they do. I can’t imagine how any self-described fiscal conservative could even consider such a horrid idea.
Bob Marshall lays out the crap sandwich we’re almost certainly going to be force-fed like this:
Dear Fellow Virginians,
Well, now we know the tax hikes for sure! The House/Senate Transportation Bill (HB 2313) Conference Committee brought both bodies their Conference Report today. I intend to vote NO on final passage. Please contact your delegate/senator today and urge them to vote no. The bill includes the following tax increases:
- Replace the current 17.5 cents per gallon flat tax on gasoline with a 3.5 % wholesale sales tax paid by distributors, which will be passed on to consumers, and a 6 % wholesale sales tax on diesel fuel.
- Increase the 5% retail sales and use tax paid statewide on most purchases to 6% in Northern Virginia and Hampton Roads and 5.3 % in the rest of the state.
- Apply a $100 annual fee on alternative fuel vehicles, including hybrids.
- Increase the current 3% sales tax paid on the purchase of motor vehicles to 4%.
- Increase the amount of general fund money diverted to fund transportation from .50 % to .675 %, raising roughly $200 million when fully phased in.
- The sales tax in Northern Virginia and Hampton Roads will be 6% instead of the 5.3% in the rest of the state.
- In Northern Virginia there will be an increase of 40 cents per hundred dollars on the sale of a house. That’s an extra $1600 on the sale of a $400,000 home.
- Also in Northern Virginia there will be a 2 % occupancy tax for hotels.
- If Congress passes the Marketplace Equity Act (which requires on line businesses to collect sales taxes) the proceeds will be distributed as follows: 55.55% for schools; 22.2% for local governments with no restrictions; and 22.2% for roads and transit. If Congress does not pass the Internet sales tax collections act, an additional 1.6 % tax would be added to the wholesale gas tax.
Not all of the sales tax increase (the extra .3% statewide or extra 1% in Northern Virginia & Hampton Roads) will go to transportation. Part will go to schools and other general fund programs. There is no prohibition from using more of the tax increase for things other than transportation, nor anything to stop reinstating the gas tax on top of all the other taxes in future!
NOT FIXING WHAT IS BROKEN: In this session, the House of Delegates:
- Rejected an attempt to increase representation of Northern Virginia and Hampton Roads on the Commonwealth Transportation Board, the VDOT agency that decides which projects are funded. The current CTB is weighted in favor of districts drawn from the 1930’s.
- Agreed to fund two roads which proponents hope will spur economic development: (A) $1.4 Billion for a 55 mile toll road parallel to existing Rt. 460 (Suffolk to Prince George), a project which VDOT says will create 4,000 jobs but lists no traffic counts; (B) Increase by $554 million for a total of $1.3 Billion to finish and four lane Rt. 58 to the intersection of I-77/I-81, a road that carries only 7900 cars daily.
- Declined to alter the decades old transportation funding formula for the allocation of money to VDOT construction districts. This will perpetuate the practice of funding rural rather than urban areas. Apparently, if rural law makers vote for these higher taxes, they have been assured that no change will occur to the funding formula.
UPDATE: NLS has a soundbyte of Governor McDonnell in 2009 promising that he would not raise taxes in order to fund transportation, the exact opposite of the crap sandwich he is pushing for now. The colorful language just helps to make the point clear, dontcha think?
UPDATE 2: Now that Delegate Marshall has had the time to read the conference report on HB 2313, he’s found additional problems, in addition to clarifying some of the information that he was given that was not correct:
- The personal property tax will increase from 3.5% to 4.3%.
- The tax on vending machine sales rises from 4.5% to 6% in NOVA and Hampton Roads and 5.3% elsewhere in the state.
- Heavy equipment used for contracts on road construction, railroads, docks, etc. will be taxed at 4.3%, up from 3.5%
- Except for the increased tax on motor vehicles, other tangible personal property will be taxed at 5%.
- In Northern Virginia, commercial, industrial and residential land and building sales will have an additional tax of 25 cents per $100 of value. (A Conferee had previously told me the tax was 40 cents per $100)
- In Northern Virginia there will be a 3 % hotel tax (Legislators were previously informed this amount was 2%)
- While the bill shifts the 17.5 cent flat tax per gallon of gas to a 3.5% sales tax on the wholesale price of gasoline, it is speculative to claim that motorists will pay less for gas because the sales tax will be computed on the wholesale price of gas as of February 20, 2013 and will not go below this floor.
- The sales tax on purchasing vehicles (trucks and cars) increases from the current 3% to 4% on July 1, 2013, 4.1% on July 1, 2014; 4.2 % on July 1, 2015, and 4.3% on July 1, 2016. (Legislators were told it was a straight 4% tax. In reality, the tax increases each year through 2016.)
- If Congress does not pass the internet sales tax collection law, the tax on wholesale gasoline beginning January 1, 2015 will increase from 3.5% to 5.1%.(regular gas) and 6% (diesel). There is no provision in the law to revert back to 3.5% should Congress pass the internet tax law after 2015.
By the way, if Congress passes the internet tax, mom and pop internet stores will be forced to comply with thousands of jurisdictions’ differing tax rates. Big online companies can easily comply but their smaller competitors could be forced out of business.
The opinions expressed here are solely the views of the author, and not representative of the position of any organization, political party, doughnut shop, knitting guild, or waste recycling facility, but may be correctly attributed to the Vast Right-Wing Conspiracy. If anything in the above article has offended you, please click here to receive an immediate apology.
Leave a Reply