Let out-of-staters keep paying lots of Va. fuels tax
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Your daily Letter to the columnist — Jan. 21, 2013
Dan,
Just wanted you to know that you did a great job on the gas tax etc on Sunday.
Two issues Gov. McDonnell has not addressed to my knowledge: Currently 20-25 percent of our gas tax is paid by out-of-state buyers traveling through the Commonwealth. I like them sharing our costs.
With the Gov’s plan all that would be paid by Virginians, leaving about 3$00 million on the table for us to make up if my memory of the numbers is correct.
Also, what keeps the gas companies from raising the price after no gas tax is in effect to match the price of surrounding states so gas is pretty uniform?
With states all around us having higher gas taxes than we do, do you see that much difference in the cost of fuel when you visit there? Not in my trips north, south and west of the Commonwealth. Just thought I might throw these out as I am not sure the no tax Gov or his staff has thought this out yet.
As you might know as a transportation person all my life I have significant interest in this and just hope we find some way to fix our roads and do for Virginia what is desperately needed. I still believe we do not want to increase the burden on Virginian’s when we can gain a lot from our millions of out of state visitors.
Bev Fitzpatrick
ROANOKE
January 21, 2013 - 1:30 PM
Wouldn’t they also pay sales taxes?
Yes Henry, but do you think a family driving from NY to Florida is more likely to spend $50-60 on food/sundries or $50/60 on fuel?
If they’re anything like me, they only stop for fuel and maybe a soda. In fact, when I drive to Atlanta, I fill up and the 2nd exit before Georgia in South Carolina (Not the Fair Play exit, which gouges). That’s often the cheapest gas on the east coast.
Also, they don’t have to pay the additional fee on car registration, which is another component to the removal of the state gas tax.
“Wouldn’t they also pay sales taxes?”
–Comment by Henry
Yes, Henry! Those out of staters WOULD be paying sales taxes — just like they are now, in fact. Right now they are paying gas taxes on their gas, and sales taxes on other purchases they make. Eliminate the gas taxes, and they’ll merely be paying the sales taxes on their non-gas purchases. It’s a net loss for the state.
Dan,
Are we sure it’s a net loss for the state? Think of all the everyday purchases by out-of-staters besides gas along the borders with N. Carolina, West Virginia, Maryland and DC (in addition to those just driving thru). The sales tax would go up to make up for the gas tax removal if I remember the proposal correctly. Not saying you’re wrong or that I disagree with you, just saying let’s crunch the numbers and find out.
This sounds about as well thought out as his plan to privatize the ABC stores. Where does he get all these great ideas?
Just a little simple math…if an out-of-state family spends a long weekend in the state, say buying 3 tankfuls of gas…1 immediately upon entering, 1 while jogging around town, and 1 while leaving…at say 20 gallons in a tank, that would be 60 gallons, or a little over $10 in gas tax revenues.
For the revenue-neutral balance, that family would need to spend over $1300 worth of funds subject to the state’s sales tax.
I am not sure of any scenario where that may be plausible…it certainly does not conform with our typical spending or buying patterns on our vacations.
OJ, I don’t agree with your math.
For the state to realize $10 in sales taxes, a person needs to spend $200 on nongrocery items, or $400 on groceries.
However, I agree with you that someone visiting this state, who has saved $10 in fuel tax, is unlikely to say, “Wow, Mabel! I just saved $10 in gas tax! Thank you ole Virginny! I think I’ll blow $200 bucks THAT I WOULDN’T OTHERWISE SPEND in appreciation for that!”
The key is “wouldn’t otherwise spend.” Visitors from other states spend money now that is subject to the sales tax. It’s extremely doubtful that they would spend 20 times their savings in fuel taxes on retail items, which would make up for those lost fuel taxes.
“Are we sure it’s a net loss for the state? Think of all the everyday purchases by out-of-staters besides gas along the borders with N. Carolina, West Virginia, Maryland and DC (in addition to those just driving thru). ”
Speaking as a former resident of NoVA, i can only come up with one scenario that anyone from VA would go to Maryland for everyday shopping, or vice versa. The traffic is too prohibitive. The only one I can come up with is if someone is looking to purchase a very specific model/color of car that may not be available at the closest dealership, and even then, places like Ted Britt Ford have presences in both states, so it is easy enough for them to do the state transfer for the buyer.
OJ makes a good point, However, I wonder what the numbers are comparatively of people coming to VA for an out-of-state vacation vs. people passing through. (I think of the many many cars from Quebec I see going down to Florida.) Passers-Through probably generate more tax revenue from fuel.
Dan…my math is based on the 0.8% increase in the sales tax. To drop the fuels tax, the $1300 in purchases is needed to make up for the difference, using the net change in the non-food sales tax.
Your math is based on considering the entire 5.8% sales tax rate, which, if the family is already spending money in the state, the first 5% tax rate is paid regardless of the changes.
And, the grocery sales tax rate is not going to be changed…only the regualr sales tax rate. That would impact non-grocery purchases, and probably the preapred meals tax rate, since it’s subject to the full 5% state sales tax rate, plus whatever local tax rates are imposed.
Ah, OJ, gotcha. You’re correct. My bad.
No problem…the whole exercise just helps to highlight how bad a deal this is for Virginians, in terms of funding our infrastructure for the long-term. Even McDonnell acknowledged that in order to realize this being revenue-neutral to revenue-positive, it relied on growth exceeding available forecasts…meaning, voodoo economics.
I can attest that when I was commuting long distance by car, I specifically planned to avoid buying fuel in NC because the pump price was higher. I’d buy in SC and in VA, for example. One time drivers may not know to do this, but frequent travelers will. ,
If we are concerned about losing out of state money, we could boost travel-oriented taxes like hotel and rental cars. Probably not enough to make up the hole, however.
It’s just a bad idea to begin with. I disagree with shifting the burden of paying for our roads from those who use them the most, I disagree with paying for our roads from the general fund and I disagree with making me, the owner of a hybrid, which gets 30 m.p.g. (good, not great) pay a gas tax when most other cars are exempt. Are we not trying to save this finite resource for future generations, are we not trying to develop alternative fuel sources to reduce the negative affects of carbon producing fuels? This is a complete step backward and boon to Exxon and BP.
Bev Fitzpatrick,
You commented to Dan:
“Also, what keeps the gas companies from raising the price after no gas tax is in effect to match the price of surrounding states so gas is pretty uniform?
With states all around us having higher gas taxes than we do, do you see that much difference in the cost of fuel when you visit there? Not in my trips north, south and west of the Commonwealth. Just thought I might throw these out as I am not sure the no tax Gov or his staff has thought this out yet.”
I sent the following email to Dan on January 10 citing my several original Roanoke Times blog comments (click on the link to read them):
“I’m all in favor of raising new revenues to address the serious transportation deficiencies that the governor(s) and legislators have caused to develop.
However, I have a serious issue with the governor’s proposal to eliminate the gas tax. My concerns are outlined in a series of comments here: http://blogs.roanoke.com/roundtable/2013/01/mcdonnells-last-ditch-plan-for-highways/#comments
Have whatever fun with it you want.”
“This is a complete step backward and boon to Exxon and BP.”
Who in turn, donate heavily to the Republicans.
McDonnell wants to shift more burden onto poorer people and non-drivers, the Repubs think it’s OK for people to wait hours and hours to vote, and now they’re trying to destroy any working relationship by redistricting Creigh Deeds out of his seat. Right wingers are determined to tear apart the state AND the nation.
While we dicker over the fuel tax and bury our head in the sand when it comes to energy and the environment, the Japanese are doing something about it. In response to the tsunami which disabled the Fukushima nuclear plant, Japanese officials have announced plans to construct the world’s largest wind farm off their coast and to make the Fukushima prefecture 100% energy independent by 2040. That is what is called addressing a problem head on and taking definitive measures to achieve stated goals. We can learn from them.
http://www.treehugger.com/renewable-energy/japan-build-worlds-largest-wind-farm-coast-fukushima.html
Im “older”. I remember when Grayhound/Trailways had a flagstop at several places in Bedford County. I would love to ride a bus with 25 other riders, than sit in a line of 100 cars ( one person in each car, of course) trying to get past Wm. Byrd High School. However, since the early 70′s, nothing has been done to improve publictransportation, or encourage alternate fuel sources. Too many people driving too many cars. SOMEDAY we will have to improve roads, but I suppose it will be after Gov. McDonald leaves office, retiring to a quiet island where they ride scooters on dirt roads.
If they had a Blue Bus in Bedford County, you can bet I’d be at the flagstop.
Wouldn’t they pay sales tax in their gas?
scott whitaker, well said at 5:17 p.m. and 6:50 p.m. Wind farms make so much sense, in my view, unless you are Exxon and BP.
“Wouldn’t they pay sales tax in their gas??”
Comment by Henry
No.
The state Repubs have gone completely slimeball and utterly poisoned the GA.
http://www.bluevirginia.us/diary/8554/breaking-while-dems-distracted-by-inauguration-virginia-senate-gop-stages-a-coup
Just raise the gas tax. I’d rather pay 5 or 10 cents more per gallon of gas and have out of staters help with the cost of upkeep to the roads than to continually have to put my car in the shop for front end alignments, bent wheels, axles, etc.
How in the heck were we so ignorant to have a GOP monopoly of our state government anyway? We need to fix that first, then we can fix the roads.
I’m a bit biased in this conversation since I own a diesel car, and the proposed tax plan would double tax me. It seems like we could handle this in a FairTax sort of way – have a higher gas tax to capture more of the revenue from out-of-state, and refund some of that when you file your VA taxes. I suppose this would require some bookkeeping as far as claiming the deduction.
All these shenanigans and wasted time evaluating new policies and taxes to avoid violating a pledge of allegiance to an unelected sycophant. Simply raise the fuel tax. All these knuckleheads blather incessantly about government running like a business. No business I’ve run or have been a party to would waste so much time on cockamamie ideas. Too many lawyers involved! They’re professionally trained to make an hour into a billable three hours.
#16…Would you mind dropping Exxon and BP a little note of thanks for us ? I suppose the Democratic party foots its own bills…heh ? So, what is the difference in donations from big corps to the repubs and donations from big corps to the democrats ? Let us all glean something from your hypocrisy. Well ?
Mr. Gdad…have you ever thought of running for office? If you hurry, maybe you can somehow reduce the taxes that you voted in.
applewood, apparently you are not aware that the “hypocrisy” that such a discussion would expose is not ours.
than to continually have to put my car in the shop for front end alignments, bent wheels, axles, etc.
Odd, I’ve never encountered a “bent wheel or broken axle”. Perhaps you need to learn how to drive.
McDonnell wants to shift more burden onto poorer people and non-drivers
Poor people don’t pay taxes anyway, so they don’t care. The gov’t even pays their sales tax at the Golden Corral.
This is a complete step backward
Not really. Businesses will move to the state because of cheaper fuel prices. Our gas stations and related businesses will get a significant boost from out-of-state motorists who will skip MD, WV, and NC to make sure they fill up here.
Oh wait. Scott Whitaker sees increased commerce as a bad thing.
I’ve never had a bent wheel or broken axle, but note that troll suzie doesn’t mention alignments, or wear and tear on tires, or brake wear, or time and gas wasted waiting in traffic, all proven effects of letting out transportation infrastructure go to hell.
And then she throws out this funny: “Oh wait. Scott Whitaker sees increased commerce as a bad thing.”
No, suzie, you’re the one who obviously sees commerce as a bad thing. You prefer to let the roads and bridges fall apart.
Poor people pay sales tax the same as you do. Maybe even for the same items.
People who drive on a lot of the roads in this region do have alignment issues, bent wheels, and even axle damage from the potholes that catch you unaware and the rough or missing pavement. That you personally may not have experienced such is irrelevant. Your point of existence is to tear down what anyone says and apparently live like royalty while the world goes to squalor. Good luck with that.
They support a consumption-based tax on something a Republican wants to do away with while simultaneously supporting the opposite most everywhere else. Interesting.
On my daily commuting route, I’ve had a blowout caused by a rather deep pothole, that popped up during the harsh winter of 2009-2010. Had no real way to see it, I just hit it and bam, there went my left-front tire. Limped the truck down the road to a service station, because there wasn’t a decent place to pull off to change it. Cost me the tire and the rim.
In a different car, but on the same road…similar problem. Hit a deep pothole and it jacked up the alignment…that cost $75 to fix.
I’d prefer to pay $0.25 a gallon to have potholes fixed and roads repaved on a regular cycle. I got lucky both times that I was able to maintain control of the vehicle…especially the blowout.
The sales tax is oppressive since it hits the lowest incomes the hardest and the gas tax is the ultimate user tax. Just another idiotic idea from the Republicans.