Not So Fast! Transportation taxes won’t ‘fill the pockets of Virginia motorists’

A trio of AAA Mid-Atlantic press releases touting recent changes in Virginia’s transportation funding fail to mention a key part of the story: Virginians will be paying more in new taxes and those increases will more than cancel out any savings from reduced gas taxes for most of us.

When you consider the average annual miles traveled by passenger cars and light duty trucks in the United States—11,318 miles—and the average miles per gallon for these vehicles—21.4 mpg—the average Virginia vehicle owner outside of Hampton Roads will save just $31.80 a year from the reduction in the gas tax.

At the same, time, however, Virginians will see an increase in their retail sales and use tax to 5.3 percent from 5.0 percent and increases in car-related fees. Even after considering the savings from reduced gasoline taxes, these increases will cost middle-class Virginia families about $80 a year. Worse still, lower income Virginians will bear the brunt of this tax increase, since this tax will eat up a larger portion of low-income people’s salaries each month, compared to their higher income neighbors.

And if you live in Northern Virginia or Hampton Roads, you’ll pay even more in new taxes to fund regional transportation investments. In both areas, the sales tax will jump more than the rest of the state, increasing to 6.0 percent. Northern Virginia will have additional hotel taxes and new fees when residents buy a house. In Hampton Roads, an additional 2.1 percent wholesale tax on gasoline means that gasoline taxes in that region will likely increase due to the new transportation funding package. And across the state, drivers of diesel vehicles will almost certainly see a tax increase at the pump.

Although these changes will allow Virginia to invest more resources in maintenance and expansion of the state’s roads, rails, and bridges, it won’t “fill the pockets of Virginia motorists,” as AAA claims. Virginia lawmakers enacted a large tax increase this year and there’s no sense pretending it won’t cost Virginians.

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–Laura Goren, Policy Analyst