Tuesday, September 27, 2005

Moving Sales Tax Dollars to Transportation

The Virginian-Pilot today describes a proposal by some Republicans in the House of Delegates to shift some of the revenues from last year's sales-tax increase to transportation.

Says the story: “That’s one of the items that is on the table,” Del. Leo Wardrup , a Virginia Beach Republican, confirmed recently. Doing so would create a permanent new source of money for roads without a new tax increase.

With a large surplus expected this year, schools could still get a large increase in state support even if the legislature shifts part of the sales tax to road-building.

Wardrup dismissed arguments that the change would be detrimental to schools in later years when money is tighter. “I don’t think that’s an issue,” said Wardrup, chairman of the House Transportation Committee.'

The story says the $850 million surplus this year earmarked for roads triggered a dispute over whether some revenue from the sales tax increase should be set aside for transportation or whether that was a one-time thing.


At 8:13 AM, Blogger Ray Hyde said...

Let me get this straight. Last year we raised the sales tax, which amounts to a new tax on top of the old one. Now, this year, we are going to play the charade that spending this new money on roads means that we can build roads without a "new" tax.

At 12:12 PM, Blogger Steve Haner said...

Ssshhh! Be vewwy, vewwy quiet, Ray. We're hunting wabbits.

At the recent Virginia Chamber debate, both Bolling and McDonnell also mentioned dedicating a portion of the corporate income tax to transportation. I expect to see that "on the table" too. The biggest problem with that one is the CIT is notoriously sensitive to the business cycle and fluctuates widely. It also taxes only a small percentage of businesses, more and more of which are LLCs and other structures which pay no CIT.

It was more like $250 million in cash dedicated from the surplus to transportation, which is very close to the take from one quarter cent of the sales tax. The biggest problem with that idea is it really is not linked to transportation in the public's mind.

At 10:11 PM, Blogger Ray Hyde said...

You are right, Steve. Everyone I know realizes that sitting in traffic is costing us more than building adequate roads would, and they are willing to pay more gas tax to get them.

They realize that the five mile line to get through route 66 construction would have been only two miles if the construction had started five years sooner.

They know that congestion causes more pollution than driving. They know you can't build houses without bulding (at least some) roads, and they know we need houses to live. In the next 20 years 20 million more people will need houses.

How hard is this to figure out?


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