Va. governor’s proposal to eliminate gas taxes finds many fans among businesses
Alexandria Yellow Cab driver Sultan Sakhi has been driving for 24 years. All Alexandria Yellow Cab drivers own their own vehicles and pay for their upkeep — and every month, Sakhi puts more than $1,000 worth of gas into his Toyota Camry.
He drives more than 200 miles a day, and services his car twice a month. To make up what he spends on his car — gas is by far his biggest expense — he takes on more hours every day.
“Instead of eight to nine hours, I drive 14 hours,” Sakhi said.
Sakhi’s financial burdens might be eased some if Virginia Gov. Robert F. McDonnell (R) is successful in changing how the state pays for transportation projects. McDonnell recently proposed eliminating Virginia’s gas tax of 17 cents per gallon in exchange for raising the state’s 5 percent sales tax to 5.8 percent. He would also assess an annual fee of $100 on alternatively fueled cars.
For Sakhi, there’s little downside to the proposal. He said the taxi business today is the worst it’s been in 20 years, because people are using taxis only when necessary and not for “leisure and luxury.”
“We deserve to get a break here,” he said.
Sakhi said ending the gas tax would save him a few hundred dollars a year, but he also anticipates a related drop in the price of other goods, too, even with the higher sales tax.
“The price of gas has an effect on everything,” he said.
Potential gas-tax savings vary depending on the business.
Charles Kuhn, president of Sterling-based JK Moving Services, which operates a fleet of 380 vehicles, said his savings would be significant.
“Our fleet operates across the nation. But just the portion that operates and fuels in the Virginia region, we are looking at a first-year savings of approximately $40,000,” Kuhn said. “That savings will give us the ability to give that money back to the consumer. So we will be able to lower our fuel surcharges and lower our operating rates.”
Kristina Bouweiri, president of Reston Limousine, which operates 170 vehicles, said the repeal of the gas tax “doesn’t impact diesel, which is 80 percent of our fleet.”
Still, the savings from the rest of the fleet should amount to around $5,000 per month, she estimated.
Sapphire Courier Service, a Virginia Beach-based courier service, sends nine delivery trucks out seven days a week, according to owner Regina Samples. Together, her trucks cover thousands of miles a day, and her yearly gas bill is in the tens of thousands of dollars, she said.
“I don’t want any more taxes on gas,” Samples said. Even though eliminating the gas tax would raise the sales tax, “I don’t care about that,” she said.
McDonnell’s plan would direct the revenue generated from the increased sales tax to roads and maintenance, which Sakhi said would also help his business.
“If we get better traffic, we’re saving gas there,” he said.
Virginia’s retail merchants have generally been supportive of the proposal, according to George Peyton, vice president of government relations for the Virginia Retail Federation, a Richmond-based trade group. In the days following McDonnell’s announcement, Peyton said he’s been taking polls and collecting feedback from the federation’s member retailers.
“We have not found a pushback yet for the increase in the sales tax,” Peyton said, noting that Maryland’s sales tax, at 6 percent, would still be higher than Virginia’s 5.8 percent if the proposal goes through.
“Our members realize that a transportation fix is needed,” Peyton said. “If the money is indeed being used, they’d like it to be designated strictly for transportation,” he said.
He also noted that retailers were supportive because of their interest in a possible “dealer discount,” which would allow retailers to keep a small portion of the tax in exchange for collecting it.
Staff writer Thomas Heath contributed to this story.