The Washington Post reports on the proposal by Virginia’s Republican governor, Bob McDonnell, to eliminate the state gas tax, while increasing sales taxes to pay for infrastructure:
The overall plan, which would raise an estimated $3.1 billion over five years, also would increase vehicle-registration fees and add an annual $100 charge for drivers of alternative-fuel cars. McDonnell’s proposal calls for a increase in the state’s sales tax from 5 percent to 5.8 percent and projects using $1 billion in Internet sales tax revenue from legislation pending in Congress.
In the estimation of the Post, this could be McDonnell’s way of raising more money for transportation without technically breaking his promise to avoid tax increases. Presumably Virginians would be so elated at the disappearance of the gas tax that they wouldn’t mind paying higher sales taxes, even if the state ended up getting more money out of the deal. It appears that “anti-tax advocate” Grover Norquist of American Tax Reform might be willing to get behind the idea, but only if the Governor agrees to “lower the sales tax increase, include diesel fuel in the elimination of the gas tax, nix his proposed $15 increase in vehicle-registration fees, and direct more general-fund revenue toward infrastructure.”
McDonnell presents his idea not as a veiled tax increase, but more as a response to unintended central-planning consequences:
“We simply cannot continue to do what we have always done and expect this problem to go away,” McDonnell said. “If we stick to the old means of funding transportation, we will find ourselves having the same debates and facing the same revenue shortfalls over and over again.”
With more cars getting better mileage or using alternative fuels, he said, the flat, per-gallon gas tax no longer brings in enough money to bankroll “a safe, efficient and sustainable transportation network.”
A few objections to the plan have been voiced. It “lets interstate drivers off the hook,” according to Delegate Vivian Watts of Fairfax. In other words, those who drive through Virginia without buying anything but gas won’t be contributing to road maintenance. A similar complaint, with even more urgency, might be expected from Virginia residents who don’t drive much, or don’t even own a car… although they certainly do benefit from the commercial use of the state’s roads to deliver goods and services.
The people of Virginia might also consider the virtue of consolidating more of their tax burden in one place, rather than allowing it to be split between numerous sources that are rarely considered in sum. That’s a discussion that could profitably extend far beyond Governor McDonnell’s proposal, of course. Very few Americans are fully aware of all the taxes they pay. They swallow increases in some taxes because they’re not thinking about the total burden.
And in the case of infrastructure spending, it’s increasingly common for various governments, particularly the federal government, to make people think of transportation spending as an integral component of the entire official enterprise. Remember President Obama constantly demanding more money for roads and bridges? In that context, it doesn’t make sense to segregate the income stream for such “infrastructure.” It’s all ultimately part of the same balance sheet, no matter what pretenses are made to the contrary.
And it might be time to think about how the best, fairest way to fund all of it is by a simple tax on consumption, rather than the hideously complicated maze of taxes on every aspect of life and business that we currently pay. As the argument advanced by Gov. McDonnell suggests, that complicated system is also fragile – it can go haywire when some of its assumptions are challenged, as in the case of a gas tax starved of revenue by cars that get incredibly good gas mileage.