Bob McDonnell’s Virginia road tax evasions
By Robert McCartney,
Virginia Gov. Bob McDonnell’s new transportation plan has one great merit: It gives him and his Republican allies in the state legislature a sliver of political cover to support a major, necessary tax increase while insisting they’re doing no such thing.
Admittedly, it’s the tiniest of fig leaves. McDonnell is employing multiple evasions to maintain that the scheme isn’t an overall tax hike.
The governor wants Virginians to overlook the fact that the plan would add nearly $2.4 billion to sales taxes and vehicle fees they’ll pay over the next five years. (He also would divert $800 million of existing revenue, for a total of nearly $3.2 billion for roads and transit.)
Unfortunately, in cobbling together a package that he can defend as something other than what it is, the governor has produced an unwieldy mix of undesirable and misleading proposals.
In particular, McDonnell would abolish the state gasoline tax of 17.5 cents a gallon. Increases in other levies would more than offset the lost revenue.
Scrapping the gasoline tax is a catchy idea, especially for a politician who dreams of seeking the GOP presidential nomination.
But it’s bad public policy, because the gas tax is a nearly ideal way to fund highways. It’s borne by the people who use highways. It penalizes fossil fuel use and thus is environmentally friendly. Out-of-state drivers, rather than Virginians, pay a sizable chunk of it.
The governor argues correctly that the gasoline tax is yielding less revenue as cars become more fuel efficient. But that’s no reason to get rid of it altogether.
While promoting the fiction that replacing the gasoline tax is some kind of inspired conservative innovation, McDonnell clings to weak rationalizations to justify his contention that he’s not proposing a net tax increase.
For instance, McDonnell argues that his proposed jump in the state sales tax from 5 percent to 5.8 percent, combined with dumping the gasoline tax, is “essentially revenue neutral.” That’s because it nets only $25 million in the first year.
The additional $582 million raised in the subsequent four years supposedly doesn’t count, because that results from inflation and economic growth.
Also, $547 million in increased vehicle registration charges are dismissed as fees, not taxes.
Most blatant of all, a full $1 billion in new money to be collected in sales taxes on out-of-state purchases (such as over the Internet) is supposedly irrelevant — because the state is theoretically obliged to collect those levies already.
That provision also is deceptive because the governor is promising Virginians a big swath of revenue that neither he nor the General Assembly has the power to deliver. It’s up to Congress to pass the necessary legislation. In the current political climate in Washington, that’s hardly safe to assume.
I almost never agree with the anti-tax guru Grover Norquist, but I share his assessment that McDonnell’s package is a “Trojan horse” for a tax increase.
“This is a deliberate plan to change the tax code to bring in more money to spend, as an alternative to putting roads as a higher priority [for existing revenue],” Norquist said.
Even if McDonnell won’t admit it explicitly, it’s satisfying to see him finally yield to the reality that higher taxes are needed to meet Virginia’s pressing needs for roads and transit.
He irresponsibly promised not to raise taxes when he ran for office in 2009. He lambasted his opponent, state Sen. Creigh Deeds (D-Bath), with TV ads accusing him of planning to increase levies.
Today, while sticking to his line that the plan technically doesn’t raise taxes, McDonnell adopts a different tone.
“There just aren’t any free lunches. I don’t see any other plans out there that will pass [the legislature] and actually solve the problem,” McDonnell told Richmond radio station WRVA (1140 AM).
Given the turn of events, I called Deeds and invited him to criticize McDonnell as a hypocrite. It turns out he’s a bigger man than that.
“What good would that do?” Deeds said. “I didn’t win that election. . . . It’s very positive that he’s finally acknowledged that there’s a problem and he’s come up with a proposal.”
Deeds did allow himself a morsel of self-congratulation about 2009: “I lost for lots of reasons, but I didn’t lose because I was wrong.”
Regardless of how he pitches it today, McDonnell has conceded that point.
For previous Robert McCartney columns, go to washingtonpost.com/mccartney.