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Virginia State Senator Proposes New Gas Tax

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A Virginia state senator is proposing a new gas tax to help fund transportation projects.
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A Virginia state senator is proposing a new gas tax to help fund transportation projects.

As Virginia lawmakers await the details of Gov. Bob McDonnell's transportation funding plan, one state senator is releasing a proposal of his own.

State Sen. John Watkins is proposing a 5 percent tax on the wholesale price of gasoline, which he says should be offset by reductions in the state income tax.

"Is it enough? Probably not," he says. "It's probably all I could get passed."

Watkins says his plan would generate $750 million per year for transportation, about a quarter of a billion dollars more than McDonnell says his yet-to-be-unveiled funding plan would need to generate so the state can keep building roads. Watkins says his tax would not pinch drivers at the pump. He says he doesn't even think they'll see a difference.

He prefers a tax on the wholesale price of gasoline to increasing the state motor fuels tax, which has been stuck on 17.5 cents a gallon since 1986. Because that tax was not indexed to inflation, it's lost much of its purchasing power.

"That's the problem with the 1986 legislation, the last time we raised the gas tax," says Watkins. "We did not do a percentage. It did not index, and it has not kept up. It's worth about 40 cents on the dollar of what it was worth in 1986 when it passed."

Watkins says the best way to generate revenue would be a vehicle-miles-traveled, or VMT tax, but he says that would require federal legislation because it involves interstate travel. He thinks VMT is a couple decades away.

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