Growls

With the Virginia General Assembly set to return to Richmond next Wednesday, July 9, to resume their special transportation session, it’s worthwhile to do a bit of homework. Last October, the Tax Foundation released a “background paper” entitled, “Paying at the Pump: Gasoline Taxes in America."

The Virginia Senate has a proposal on the table that would raise Virginia’s gas tax while the House of Delegates has a proposal that would authorize most of the fees and taxes that were declared unconstitutional because they would be imposed by the unelected Northern Virginia Transportation Authority. Consequently, it seems appropriate to do a bit of homework by looking at the paper by the Tax Foundation. Below is a portion of the executive summary from this policy study:

“Over the past century, Americans have witnessed a marked increase in mobility through safe and reliable roadways. This improved mobility has undoubtedly increased the overall quality of life in the United States. Gasoline taxes have provided the required funds to build the roads that brought America into the transportation age.

“Gasoline taxes are often mentioned as the best form of taxation from an economic perspective because they provide a system of road funding by simply charging road users when they fill up their tanks. This "user tax" adheres to what economists refer to as the benefit principle of taxation.

“Gasoline taxes have been in operation for well over 80 years in the United States. Unfortunately, the years of political pressure have eroded the original intent of gas taxes. In all too many instances, benefit-principle taxation has taken a backseat to political pandering. For instance, current federal highway legislation authorized over 6,000 earmarks from the highway trust fund. Some of these went to legitimate transportation programs, but others were earmarked for items such as the infamous "bridge to nowhere." Today, gasoline tax revenue is spent on everything from public education and museums to graffiti removal and parking garages.

“Not only do benefit-principle taxes represent sound economic policy—they are popular with American drivers as well. History has clearly demonstrated that the most popular gasoline taxes have been those which directly linked gasoline tax revenue with road spending. If gasoline taxes are to survive as the "best tax," the benefit principle must be enforced.”

The entire paper is worth reading, especially for Virginians, who will learn the state gas tax has existed since 1923 when it was established with an initial rate of 3 cents.