Reviews | Virginia Democrats could pay for rejecting Youngkin’s gas tax exemption

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Virginia Senate Democrats took a politically risky vote last month when they killed an amendment Gov. Glenn Youngkin (R) made to the state budget that would have scrapped Virginia’s gasoline tax – now 26.2 cents per gallon – through September.

Their reasoning was valid from a tax point of view. The state’s fuel tax accounted for just under a quarter of the Commonwealth Transportation Trust Fund that pays for Virginia’s roads and bridges in the state’s 2020 and 2021 fiscal years.

Only state sales tax and vehicle sales tax accounted for larger shares of the fund, which totaled $3.6 billion in fiscal 2020 and $4.1 billion in 2020. fiscal year 2021. Waiver of the gasoline tax for the first quarter of the state’s fiscal year 2023 that began July 1 would significantly decrease money for construction, maintenance, and repairing highways and bridges in Virginia.

However, the optics of defeating the tax cut proposed by Youngkin and backed by the Republican-controlled House — especially with gasoline at record prices — are not good. At least not for the Democrats.

Popular zeal to eliminate a hated tax has trumped previously sound fiscal policy in Virginia. In the late 1990s, Jim Gilmore convincingly won the gubernatorial election and swept an all-Republican statewide slate largely on his promise to end the personal property tax. that Virginians paid on their cars and vans.

Democrats warned at the time that the program to phase out the locally collected tax and then reimburse cities and counties for lost revenue with public funds was unsustainable, and they were right. In 2001, even some legislative Republicans blamed a mere partial personal property tax cut for continuing structural imbalances in the state’s general fund. Three years later, the General Assembly voted to cap the phasing out of the car tax as part of a comprehensive tax reform package.

But during the 1997 election campaign, the Democrats’ logical rebuttals on the auto tax issue did them no good. Their explanations did not live up to Gilmore’s simple, unambiguous and powerful mantra “No Car Tax” because in politics, if you explain, you lose.

At this year’s June 17 all-day session to consider Youngkin’s vetoes and two-year-belated budget amendments, Democrats argued for their own proposal to provide Virginia-registered auto owners with $50 (or up to $100 per household) as an alternative to GOP. tax reduction.

There were reasonable talking points behind their unsuccessful idea. Direct state payments would only go to Virginians, while out-of-state motorists passing through Virginia would receive the same benefit as Virginians of a tax reduction. They also pointed out that there is no guarantee that consumers will realize the 26.2 cent savings on each gallon, as gasoline distributors, who pay the tax, may not pass the savings on to the price. they charge retailers, and retailers might not pass on any discount they receive to end users at the pump. There is also the economic argument that suspending gasoline taxes only exacerbates the underlying problem by increasing demand for a limited global supply of fuel.

But those explanations don’t come out of the page of unsolicited campaign hits that fill mailboxes or TV, online and radio ads like the biting message of the vote to deny Virginians tax relief in a time of record fuel prices and runaway inflation.

Youngkin explained how Republicans will weaponize the gas tax vote next year in a tweet he sent from his personal account the same evening that the Senate rejected the proposal.

Worse, the Democrats’ position seems even more unnecessary and out of touch because one of their own — President Biden — has called on Congress to suspend the 18.4-cent-per-gallon federal portion of the gas tax and has called on states to suspend their gasoline taxes as well.

Democrats hold 21 of the 40 state Senate seats. Losing a single vote allows Republicans to win the tie votes because Lt. Gov. Winsome Earle-Sears (R) casts the deciding vote with the House deadlocked 20-20. But Republicans, who now control both the governor’s office and the House of Delegates, have been licking their chops since last fall at the prospect of wiping out the shaky majority of Democrats in the Senate and cementing their grip on government. state in the 2023 legislative elections.

The GOP will stand by the vote against the gas tax exemption and show it in attack ads a year from now to remind voters that Senate Democrats voted against lowering gas taxes when inflation was destroying family budgets in 2022.

And the Democrats will then have to explain themselves to the restrictive budgetary and operational context of their position, which will surely not play out in the heat of political action.

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