Will raising Virginia’s gas tax solve anything?

As much as the Virginia press corps would prefer that the General Assembly finds itself tangled in a another net of social issues in the 2013 session, the worthies are more likely to find themselves snared in a battle over the gas tax.

To the delight of some, Sen. John Watkins has proposed slapping a five percent tax on gas at the wholesale level. This could raise pump prices around 14 cents per gallon. That’s sure to sting. But anticipating the sticker shock, the Watkins plan would also…

• lower income tax rates in the three lowest state tax brackets to offset most of the fuel assessment’s effect on working Virginians;

• eliminate various transportation-related tax credits and sales tax exemptions to fill the revenue gap created by cutting income tax rates;

• impose a $102 annual assessment on electric and hybrid vehicles; and

• prohibit tolls on existing highways unless they are approved by the General Assembly

Watkins believes this mass of moving parts will raise over $700 million per year for roads (with those pesky out of state drivers paying up to a third of the total), while the tax cuts would return over $500 million to lower income Virginians.

While one can debate Watkins’ projections, and whether the other portions of state government (and their defenders) that will take a hit from lower income tax receipts will play along, there is a fundamental question lying at the heart of this approach which few seem to have asked: will this approach make a bit of difference?

The inestimable Jim Bacon says “no.”

Watkins’ plan, like all the others made public so far, would perpetuate the system in which transportation projects are determined by rent-seeking, political log rolling and ideology, not demonstrated need. Indeed, by creating a new source of revenue and superficially “solving” the problem, the proposal would ensure that nothing changes.

To find out what else the plan can’t, doesn’t or won’t do, go read the rest of Jim’s piece at Bacon’s Rebellion.