Virginia General Assembly moving forward with replacing gasoline and diesel fuel tax with sales tax; $100 annual tax for EVs, HEVs and alt-fuel vehicles
The Virginia General Assembly is moving forward with legislation (HB2313), that, among its other elements, would abolish the state’s gasoline and diesel fuel taxes and replace them with a sales tax.
Currently, both gasoline and diesel carry a $0.175/gallon fuel tax. Beginning 1 July 2013, the gasoline tax would be replaced with a 3.5% tax on the statewide average wholesale price of a gallon of self-serve unleaded regular gasoline for an applicable base period, excluding federal and state excise tax. The diesel tax would be replaced with a tax of 6% of the statewide average wholesale price of a gallon of self-serve diesel fuel for the applicable base period, excluding federal and state excise taxes.
Dick Saslaw, the Virginia Senate Democratic Leader told the Daily Press (Hampton Roads, Va) earlier in the week that the new legislation would provide roughly the same amount of revenue as the flat 17.5 cents-per-gallon tax.
A provision in the law lets lawmakers hike the 3.5 percent wholesale tax to 5.1 percent, if Congress fails to pass the “Marketplace Equity Act” by January of 2015, which allows lawmakers to retrieve state sales tax from online retailers. Based on an assumed market rate of $3.50 gallon wholesale, the 5.1 percent is the equivalent of the flat tax rate in effect now.
The funding scheme seeks to justify the higher diesel tax rate to reflect greater use and damage to roads by diesel-powered commercial trucks.
In the letter to the Speaker of the Virginia House of Delegates and other members, Diesel Technology Forum Executive Director Allen Schaeffer said that this outcome would create an unfair and substantial disparity between gasoline and diesel fuel and called it a disincentive to investing in clean diesel cars in the future.
In addition, the bill would levy an annual license tax of $100 per vehicle on each highway vehicle registered in Virginia that is an electric motor vehicle, a hybrid electric motor vehicle, or an alternative fuel vehicle.
The Virginia House of Delegates on Friday approved the measure by a vote of 60-40; on Saturday, the Senate agreed to the conference report on the bill by a vote of 25-15.