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Delegate wants sales tax to apply to motor fuels

The 5 percent general sales tax would be partially offset by reducing the fuel tax by 5 cents per gallon.
By Bill Sizemore | The (Norfolk) Virginian-Pilot

RICHMOND – It’s a long shot, but at least one state lawmaker is trying to head off the impending re-tolling of tunnels in his area by raising taxes on gasoline sales statewide.

Del. Kenny Alexander, D-Norfolk, has submitted legislation that would apply the state’s 5 percent general sales tax to motor fuels, generating hundreds of millions of dollars in new funding for Virginia’s overburdened transportation infrastructure.

If passed, Alexander says, his measure could provide an alternative means of financing the planned expansion of the Midtown Tunnel and rehabilitation of the Downtown Tunnel. That project is now slated to be funded by the reimposition of tolls on the two Elizabeth River crossings later this year.

Alexander’s proposal, HB892, is unlikely to get traction in the current political climate. Republican Gov. Bob McDonnell and the Republican-led General Assembly have consistently opposed any new taxes for transportation.

If tolls are imposed on the two tunnels, Alexander said he at least wants motorists to have the option of paying them in cash.

To that end, he has introduced another measure, HB889, that would enable drivers to pay the tolls without the use of automated or electronic devices.

Current plans call for collecting the tolls only via the electronic E-ZPass system, eliminating the need for toll booths.

Cash or E-ZPass, the tolls will impose a burdensome cost on his constituents, Alexander said.

The tunnel project is being undertaken by a public-private partnership. The toll for cars during peak hours will start at $1.84 and could be increased up to 3.5 percent a year for 58 years.

For many area residents, the tunnels are essential for getting to jobs, medical services and government offices, Alexander said.

“Hampton Roads is one community,” he said. “To toll those roads, to me, is problematic because we’re so interdependent.”

Alexander’s funding proposal would generate an estimated $800 million a year by imposing the 5 percent general sales tax on motor fuels. He would partially offset that by reducing the current fuel tax from 17.5 cents to 12.5 cents per gallon, reducing revenue by $250 million a year.

The remaining $550 million in new revenue would be dedicated to highway construction and distributed according to this formula: 38 percent to Northern Virginia, 31 percent to Hampton Roads and 31 percent to the rest of the state.

The bill also authorizes the issuance of $5 billion in bonds to be repaid from the net new revenue.

Another lawmaker, Del. Algie Howell, D-Norfolk, has introduced a bill, HB393, to raise the existing fuel tax by 10 cents per gallon.An identical bill from Howell last year was killed in committee.

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