McDonnell’s last ditch plan for highways
Some of the governor’s transportation ideas merit debate, but his plan to take money from other core services is a nonstarter.
Gov. Bob McDonnell has finally acknowledged in his latest transportation plan that higher taxes are needed to prop up Virginia’s fading highway construction program.
The governor’s proposal represents an earnest effort to think outside the box and perhaps break the gridlock gripping the state Capitol.
January 10, 2013 - 8:11 AM
Virginians need to be upset about Republican Governor McDonnell’s windfall payoff to Big Oil.
He is proposing to eliminate Virginia’s 17.5 cent state gas tax. Is anyone naïve or foolish enough to believe that gas prices will fall 17.5 cents and stay 17.5 cents below what they would have been if the tax stayed in place?
The answer is, of course not. Prices will increase to meet national numbers and nearby state competition. And the petroleum industry will pocket that windfall. McDonnell has proposed nothing to keep that from happening.
So, what McDonnell is proposing is a DOUBLE tax INCREASE on Virginians.
First, he is increasing direct taxes by raising the sales tax MORE than the amount of the gas tax eliminated. Virginians will pay MORE taxes directly as a result of his proposals.
Second, when, AS IT WILL, the gasoline business raises its prices to fill in the eliminated gas tax Virginia taxpayers will be taxed AGAIN by McDonnell in a transfer payment from taxpayers to the gasoline industry. McDonnell is proposing a petroleum business WELFARE payment at taxpayer’s expense.
Are you foolish enough to think that won’t happen? Consider the following fact: North Carolina’s state gas tax is 20 cents higher than Virginia’s gas tax yet the average gas price in North Carolina is only 9 cents higher than Virginia’s. Having a 20 cent lower state gas tax does NOT save Virginians 20 cents in gas price. So please don’t be foolish enough to believe that eliminating the 17.5 cent gas tax will save Virginians 17.5 cents per gallon – the gasoline industry will pocket a taxpayer payoff courtesy of Gov. McDonnell.
It is a CERTAINTY.
Will the governor address that? Will anyone even think about it?
Chris, that is a VERY good observation.
McDonnell has basically said to the gasoline industry: “Through its imposition of a 17.5 cent tax on gas the State has conditioned/trained taxpayers to pay their current gas prices. I propose to eliminate that tax. You, the gasoline business, knowing that taxpayers have been so conditioned, can do whatever you want with that 17.5 cent reduction. You can pass all the decrease on to taxpayers, some of it, or you can put all of the 17.5 cents in your own pocket. It’s your choice. Either way, I’ll do nothing about it. We’ve groomed the sheep, they’re yours for the shearing!”
The gasoline industry gets to increase their revenues from taxpayers without:
1) risking a penny,
2) any investment,
3) or creating a single job!
A situation that only Big Oil and Republican politicians could love!
There’s an old saying to the effect “To find the guilty, seek who profits from the crime.” Regarding McDonnell’s proposal to eliminate the gas tax, seek which lobbyists are working to advance the proposal in the legislative hallways in Richmond.
If you find the gasoline retailers association and kindred petroleum industry lobbyists working hard, then you have your answer.
McDonnell’s own numbers indicate the potential taxpayer WELFARE the industry can reap. Under the current 17.5 cent gas tax McDonnell estimates that $684.1 million in taxes would be collected in FY 2014. If the tax were eliminated and the gasoline industry kept just one cent of the 17.5 cents (that is, if they lowered prices 16.5 cents and pocketed 1 cent) the industry would still reap over $39 million of taxpayer paid WELFARE. And that’s if they kept only 1 cent! Is anyone foolish enough to think that’s all they’ll keep?
So the industry is being invited (virtually begged!) by McDonnell to get its hands into taxpayers pockets. They’d be crazy not to.
Industry lobbyists will try to avoid acknowledging this reality. They’ll spin it fifty other different ways. They’ll count on folks being fools.
If McDonnell found a way to turn old tires to gold, the RTEB would likely have a problem with it.
Let me make clear, I’m reluctantly for increasing revenues to get us out of this transportation crises that our governor(s) and legislators CREATED.
However, if – as typically happens – we taxpayers are forced to pay for political incompetence and cowardice, I want to make the penalty on us taxpayers as small as possible.
The governor’s proposal is a grossly INEFFICIENT revenue raising scheme. It essentially constitutes a charge to taxpayers of taxes PLUS whatever the gasoline industry can exploit from political incompetence.
So you support this plan Bob H?
Another way to look at this is as a win-win for Gov. (Better than the Second Coming) McDonnell. He proposes an outside-the-box plan to raise revenue that looks like it is reducing taxes. If it passes, he claims the accolades for solving the transportation crisis. If it (we all hope) is shot down by the General Assembly, he can point a finger at that body as not being visionary and obstructing his great plan. Goofy, but so is the governor.
One does wonder about the who and how of running the numbers on this plan? A lot of quick “back of the envelope” calculations have been done here and other places have shown that there really isn’t a up side to this as far as saving the middle-class and below any money. Either the guv’s advisors didn’t do due diligence or they are hiding a lot from the public. At any rate, we can’t be rid of McDonnell soon enough (as long as he isn’t replaced with Cooch).
You need to compare the portion of gas tax paid for by out-of-state customers with the same portion for sales tax. This proposal not only pumps money into the oil companies, it pumps money out of Virginia into neighboring states.
By the way you can call in to Virginia Conversations on WVTF at 9 AM on Friday January 11. Their guest will be Governor McDonnell.