Virginia Is Worried Cars Are Becoming Too Fuel-Efficient

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The average fuel economy of new vehicles rose 6% in 2012, and cars are expected to use less and less gas going forward. Isn’t that a good thing?

Well, not if you’re a state hoping to bump up revenues collected on gasoline sales. Less gas sold means less gas taxes collected by states—and therefore, less money the states have to build highways, patch roads, and do all of the other things normally funded by gas taxes.

To increase gas tax revenues, or at least maintain their current levels, one simple solution is to hike gas tax rates. As a New York Times magazine story recently detailed, many economists think higher gas taxes—at least $1.25 per gallon, more than double the current national average—are necessary for a wide range of reasons, including the reduction of traffic and offsetting the environmental impact of driving.

Curiously, in Virginia, Governor Bob McDonnell is suggesting just the opposite as a solution. McDonnell is proposing that Virginia eliminate its gas tax, which is now 17.5¢ per gallon. Since gas tax revenues are bound to decline as drivers buy less fuel, McDonnell suggests that the state drop this tax entirely, while jacking up another tax—one that’s paid by everyone, not just drivers, and that’s never expected to decline. If the proposal passes (it’s quite a long shot), road projects in Virginia would no longer be funded by gas taxes, but by a 0.8% increase in state sales tax, which would rise from 5% to 5.8% (still lower than neighboring Maryland‘s 6% rate).

(MORE: Not Your Grandpa’s Mercedes: Luxury Car Makers Aim for Younger, Less Rich Customers)

The Richmond Times-Dispatch quoted McDonnell’s attempts at explaining the proposed “solution”:

“We have a problem in Virginia and it’s a math problem,” McDonnell said in announcing his proposal. “When you look at what is happening with the primary sources of transportation funding, the fuels tax, that it is on a downward slope.”

Perhaps even more curiously, McDonnell is also suggesting that the owners of alternative-fuel vehicles—who are accustomed to receiving bonuses (rebates, free charging stations, access to special highway lanes) for their green choice of vehicles—should pay a $100 annual fee. And here’s how the governor explained this part of his plan:

“I’m a strong supporter of alternative fuel vehicles, and I’ve directed that we convert the state vehicle fleet to natural gas, but these vehicles generate little federal gas tax revenue and therefore need to contribute their share to fund the roads they use,” McDonnell said.

(MORE: Why the Car of the Future Will Be Powered by … Gasoline)

The proposal has support in certain circles—like among taxi companies and other businesses that spend a lot out of pocket on fuel costs and would obviously benefit if gas was cheaper. A Washington Post story recently offered their point of view, as well as that of the Virginia Retail Federation, which swore that it has “not found a pushback yet for the increase in the sales tax” among its members. Supporters also argue that the disappearance of the state gas tax may trickle down, so that prices would decrease for all sorts of goods and services priced partially based on the cost of fuel.

Regardless, everyday consumers may not like the idea of paying for services they don’t necessarily use. “There’s no need for people that don’t drive a car to pay higher taxes on consumer goods in order to subsidize those people who do drive cars,” Virginia Sen. J. Chapman Petersen said, according to the Times-Dispatch.

The point here is figuring out how to fund road infrastructure, right? Interestingly enough, surveys show that the majority of drivers actually support higher taxes on gasoline (a theoretical 10¢ increase) so long as the funds raised are used to improve roads. Think about that: How often are the majority of Americans behind the idea of increases taxes on anything?

(MORE: Top New Cars of 2013)

Nonetheless, McDonnell wants to eliminate the gas tax and spread the burden of funding road improvements to all consumers, while simultaneously decreasing incentives for drivers to purchase more fuel-efficient and alternative-fuel vehicles and to stay off the roads more, perhaps by using public transportation. But hey, gas would be cheaper!

41 comments
Vespaluus
Vespaluus

We've got to get rid of people like this from Governments. One reason for the existence of vehicles as wasteful as the Hummer and SUVs is that gasoline is taxed at a rate far lower than the public costs of supporting automobiles. The trouble with people like McDonnell is that they have a faith-based attitude that taxes are sinful, or at least that raising the rates will get them fired. But the demand for gasoline is amazingly inelastic, in terms of the price paid.

DixiePriest88
DixiePriest88

great idea, drop the tax on gas and all shippin prices decrease, trucks run on gas do they not?

if that goes down ALL goods'll decrease in price, likely more than the 0.8 sales hike

the part near the top where the biased reporter says, "many economists (aka just paul krugman) think doublin gas taxes are "necessary" to force people to walk, or use the goverment's transit systems - thats economics right? and to cut down on the "enviromental effect" of drivin - cause thats also economics aint it?

y'know when i need to get a tooth pulled i dont go to the local butcher, when i'm sick i dont go to the hardware store... i go see A DOCTOR

an "economist" talkin about enviromental and lifestyle/urbanization issues is totally meaninless, he got no skin in the game, i got the same qualifications as him, where's my dang mic?

and to the guy near the bottom who said this'd be "forcin non-drivers to pay for drivers" well bucky i  pay for schools, yet i got no kids, i pay for colleges yet i never went,  i pay for abortion drugs and clinics yet i'm a man and religiously opposed to it, i pay for anti-smokin ads and yet i smoke, i pay for bicyclin routes and paths and yet i dont bike, i pay for gun control things and yet i own guns

i never got a vote on none of them things, hypocrite, you done forced that down my throat, now you gonna talk that nonsense on me?!?

Vespaluus
Vespaluus

@DixiePriest88 I know quite a few people who do not understand why it benefits them for their neighbor's children to receive and education. I can think of nothing more worrisome than to be retired in a country of massively ignorant people.

FBUSER
FBUSER

I agree with McDonnell wanting to end the gas tax, however, the other plan of eliminating incentives to buy fuel efficient or alternate fuel vehicles, is asinine and doesn't keep the average person in mind.  The average person needs the incentives in order to be able to afford to buy a fuel efficient or alternative fuel vehicle.  In fact for most people like me, the incentives almost weren't enough.  States should not and shall not count so much on one form of revenue.  Also state and federal governments need to post their budgets so citizens know what is needed to provide the services we count on and need.

Dr_D_
Dr_D_ like.author.displayName 1 Like

If you take as figure of merit: mileage x gas consumed x number of cars, it may well happen that the figure does not change after a year. More fuel efficiency means less fuel/gas consumption, more mileage and possibly more no. of fuel efficient cars. So wait for a year and then see if any state action is required.

asdfsadf
asdfsadf like.author.displayName like.author.displayName 2 Like

This is a ridiculous proposal, and I can only assume that the oil industry is behind it.  You should pay for the roads according to how you drive.  The more you drive, the more you pay.  The gas tax is the simplest way to accomplish that.

brucelanc
brucelanc like.author.displayName 1 Like

Non-drivers in Virginia think they don't use the roads?  Huh.  Total break down in logic.  Of course they use the roads.  How do they think the groceries got to the store?  How do they think people who provide services they use get to work?  How did the power company get to the blown transformer during the last storm?  How did the cable man get to their house to bring them internet and TV?  How did the shirt they are wearing get to the department store they bought it from?  How did their mail get to them?....  Non-drivers/automobile owners use the roads a lot.

Vespaluus
Vespaluus

@brucelanc I have a somewhat complementary view of public transport systems. When I rode a bicycle to work, the existence of Washington's Metro was something I considered advantageous to me, and to those who still commuted by car. Every Metro rider who might otherwise have been clogging the roads was a help.

brucelanc
brucelanc

@Vespaluus @brucelanc  I do too.  Public transit is important in more ways than can be described.  As far as tax burden distribution in regards to public roadways, though... The logic that non-automobile owners have no stake in the construction and upkeep of the infrastructure is deeply flawed.  Everyone benefits from roads.  Those who do not drive for whatever reason are not non-road-users.  This article quoted Se J Chapman Peterson as saying non-drivers don't use roads and therefore shouldn't have any tax burden in regards to that infrastructure.  That Senator obviously speaks before thinking.

asdfsadf
asdfsadf

@brucelanc Of course everyone benefits from the roads, but those who drive more should pay more than those who drive less.  


If the grocery store uses the roads to transport merchandise to the store, that is already reflected in the price of the groceries.

ZweiStein
ZweiStein

5% sales tax?   Wants to raise it to 5.8%?  You gotta be kidding!  Ours is close to 10%.

jkantor
jkantor like.author.displayName like.author.displayName 2 Like

Gas taxes hurt the poor - who can only afford older, less efficient cars. Tax people on the value of their car each year. 

RamonaJackson
RamonaJackson

@jkantor There are already car taxes in VA: sales taxes on cars, some counties have ANNUAL CAR TAXES that must be paid, annual license fees, annual inspection fees and decals, these are all in addition to the gas tax.  VA also has the 2nd worst roads in the country.  West VA is the worst.  There are potholes that can break your car's axle season after season that are never repaired, just filled in. 

VA's a bad place to live and own a car.   Believe it.   

KevinW
KevinW

Is fuel efficiency REALLY going up, or is that based on manufacturer claims, which are held to very low standards. I defy anyone to buy a car and get the claimed mpg, without driving downhill that is

ZweiStein
ZweiStein

@KevinW My daughter's KIA gets BETTER than what KIA claims.  A friend's Accord gets better.  Another friend's new KIA also gets better than claimed.  My son's KIA gets better than claimed.  I know, it sounds like a KIA bunch here.  But I don't drive a KIA and no, none of us are affiliated or compensated by KIA in any way shape or form.  And yes, we were all surprised by this.

schmekis
schmekis like.author.displayName like.author.displayName 2 Like

It's ridiculous to bemoan improvement. Oh crap, people are eating healthier, now we can't sell them junk anymore? Dang, a lot of these new charter schools are sending a lot more students to college than we ever did, now we have to improve - dang!  I wish this was sarcasm, but it this is literally what happens in America every day.


There are dozens of solutions, I at face value kind of like the idea of using this shrinking tax problem to solve another very big problem - our Debt. Privatization of all roads is an option that could become seamless with technology. Only issue would be hackers, but there will be dozens of profitable solutions to this problem as well.

Now think about privatization. A single bridge could be worth billions of dollars. Only a small percentage of the road infrastructure would have to be sold to pay off all of America's debt.  Think of what America could then do with all the billions upon billions of dollars that are currently be paid as interest on debt owed to China, Japan, et al

I've learned that finding solutions is rarely ever the problem. In fact there are more viable and regrettably nonviable and unpopular solutions competing to solve societal problems than we know what to do with. The true problem is the fighting in D.C. to determine which solution is best. Free Markets are ridiculously inefficient when compared to the efficiency of a Toyota Production Line, but surprisingly the government manages to be even less efficient than that, in all that it does! A lot of the fighting in govt  is why almost everybody hates politics; even though we are simultaneously grateful for the debate and the checks and balances that the fighting can create. 

Start implementing some solutions for crying out loud!  If you can't do it in a civilized and efficient manner, then give us our money back and we the people will figure it out ourselves. And lastly, the politician that bemoans a nearly universally agreed upon improvement (i.e. - more efficient vehicles), needs to be impeached. It's this mentality that is the problem. 


If anybody solves the government's inefficiency problem, I will propose that you get your very own Mount Rushmore.


Now if somebody wants to drive a car that gets 9 mpg, I have nothing against that - that's their choice and problem. I'm not for forcing people, but I am against the crabs in business, in government and in the non-profit sector who wish things weren't getting better for everybody, because their organization, their constituents or they personally happen to be impacted negatively. The hurt 50 people to benefit one mentality can't be tolerated, especially when the one is very capable of implementing dozens of viable solutions to their problem. Of course if the God-given rights of the one are being violated, this is totally different story. 

 In short, I have zero sympathy for those who wish cars weren't getting more efficient; or wish that anything wasn't getting better.


Sorry for the rant.

Vespaluus
Vespaluus

@schmekis There are some things that "private enterprise" cannot do well. If an enterprise needs serious deep scientific knowledge, proprietary ownership causes perverse incentives.

Britain had an excellent Central Electricity Generating Board, until Thatcher sold it off to private companies. The capital cost of the nuclear power industry is by far the highest expense of the remarkably inexpensive product. Yet before long, the private companies had found that one way or another the reactors "needed" to be expensively decommissioned. Eventually, the owner of the majority of the remaining reactors, "British Energy" became a French subsidiary.

DixiePriest88
DixiePriest88

sure, let em get more efficient

just dont force me to pay for it

all i'm askin,

take your thievin hand out my pocket

razorback10
razorback10

Privatization of things may seem like a good idea in that it saves money in the form of taxes.  However, corporations only do things to make a profit on them.  The money still needs to be collected somehow be it tolls or whatever else they can think of.  Privatization does not mean free or even reduced cost.  It means that instead of the gov't trying to just do the job, the job will be done by someone who is only looking to make a profit for doing it.

In the end the cost has to be paid somewhere.

JimDunbar
JimDunbar

You got a woman problem with probes, you got a voter problem with gerrymandering and now raising taxes for roads? This won't get you a seat in the TEA party or an invite to Alaska to look at Russia.

outerlimitsurvey
outerlimitsurvey like.author.displayName 1 Like

In general cars that use less gasoline also cause less wear and tear on the roads.  Granted that someone who uses natural gas or electricity isn't paying any gasoline road taxes.  Laws are already in place to prevent diesel vehicle owners from running fuel oil to avoid road taxes; fuel oil has a tell-tale red dye that makes it obvious when it is used in an auto.    Perhaps natural gas terminals and car chargers could have meters to determine how much road taxes are owed.  Seems reasonable and I suspect that it wouldn't appreciably change the economics of alternative fuels.

You can always do what they did where I live in Texas.  Instead of adding a few cents of tax on gasoline and spending $millions fixing roads they sold the rights to the roads to a company that charges tolls.  Now instead of paying a few cents more on each of the 30 or so gallons of gas I buy in a month I pay $140/month in tolls.  It's a win-win situation for towns who no longer have to maintain roads and companies who make $billions, it is only the motorists who get screwed and we know they don't count.

DougM
DougM like.author.displayName 1 Like

@outerlimitsurvey "In general cars that use less gasoline also cause less wear and tear on the roads."  How exactly does that work?  The wear on the road is from heavy objects moving along its surface.  How does a more fuel efficient car cause less force to be applied to the surface?  ESAL value for a 40mpg 3000# car would be the same as for a 12mpg 3000# car.

dawnj6
dawnj6

@DougM @outerlimitsurvey 

Well duh, your statement is true, but silly. a 12mpg 3000# car is a rareity while a 40mpg 3000# car is reasonably. There is a very strong correlation of vehicle weight to gas mileage. Another reason gas tax makes sense.

ToddWest
ToddWest like.author.displayName 1 Like

Once again in America, greed shows through.....

MichelBartolone
MichelBartolone

Even people that do not drive take the bus, or the subway or the El, or metra etc, and I believe they rely on the infrastructure(s) needed for these. As long as the sales tax is used not just for roads, how is it unfair to those that don't drive or own cars? Then again, why not convert the 'gas tax' to a 'fuel tax' apply it to ALL fuel (including diesel, propane, and electricity) and include the cost of that tax in the fare to use public transportation, proportionately?

geeon1
geeon1 like.author.displayName 1 Like

How about the bus users pay the real fare rather than the subsidized one. Bus trips should cost dollars per use not cents.

Vespaluus
Vespaluus

@geeon1 I will take the example of the Metro. If you walk, bicycle, or drive a motor car, it is to your advantage that people who have a reasonable choice should ride the Metro trains. But if it costs me less to drive my family into the city, than to ride the Metro with them, I am tempted to use the more objectionable car. Metro will benefit its municipal sponsors best if it attracts more passengers. Indeed, I suspect that raising fares can cause loss of revenue, if it annoys passengers enough.

Ocsicnarf
Ocsicnarf

It's interesting the aproach proposed by the Virginia Governor, although I do not agree. Gas taxes are much higher in Europe and nobody speaks about reducing them. In addition we have taxes on the acquisition and ownership of vehicles and the use of roads. I think too much (everybody benefits from transportation). But that approach of the Governor is exaggerated according to my understanding.

FBUSER
FBUSER

All States in the U.S. also have taxes on purchasing and ownership of vehicles.  These taxes go towards road maintenance and other stuff.

John
John like.author.displayName 1 Like

This is just another example of  "no good deed goes unpunished". 

The wider use of the "curly bulbs", has reduced the amount of electricity used in our area so much that the shareholders aren't getting as big a dividend as they used to,, so the power company asked for a rate increase and got it.  They justified it by talking about upgrades, increased costs, etc. 



John
John

@John  We just got the bill for January, it said that the rate increase for February would be 10.1%

KeswickVA
KeswickVA like.author.displayName 1 Like

Imposing a tax on a hybrid is just what a nature loving Republican would propose. Saving fuel should be a National goal and a homeland security strategy. The Governor is proposing just the opposite . . . Wake up Virginians!

BruceMorganWilliams
BruceMorganWilliams like.author.displayName like.author.displayName 2 Like

This is a great example of the Govt. creating Perverse Incentives. By cutting gas taxes and encouraging an activity that damages roads, health, and the environment, (not to mention that oil imports cause half of our trade imbalance) the cost to the government will unquestionably go up in the long run, not to mention the lost revenue.    At the same time, by increasing sales taxes,  productive economic activity that doesn't destroy roads, health and the environment,  is DIS incentivzed.   Another brilliant forward thinking strategy brought to you by the GOP.

Garzhad
Garzhad

"Regardless, everyday consumers may not like the idea of paying for services they don’t necessarily use. “There’s no need for people that don’t drive a car to pay higher taxes on consumer goods in order to subsidize those people who do drive cars,” Virginia Sen. J. Chapman Petersen said, according to the Times-Dispatch."

Whether they use it themselves or not is irrelevant, they still benefit from it. The people that do drive vehicles on these often crumbling and decrepit roads are the ones that stock the shelves of the stores you buy your food from, that fix your cable when it goes out, that repair your power lines when they go down, that take your kids to school, ect ect. 

Cheaper gas means cheaper Everything else, to the point that in the end the sales tax hike might not even be noticeable once transportation cost savings are factored in.

Vespaluus
Vespaluus

@Garzhad "Cheaper gas means cheaper Everything else" only because we have been gulled, cullied and diddled into putting all our transportation on the roads. I really cannot understand why the vastly greater efficiency of the railroads is not reflected in lower rail transportation prices.

But it is clear that a great many of the costs of using the roads are not paid according to the destructiveness of the vehicles. I have read that automobile users pay far more, per hundred dollars worth of repair work caused by them, than do big fast heavy trucks.

JosephPottgen
JosephPottgen

so what there aresaying is they will lose the money they are lining their pockets with

EnticingHavoc
EnticingHavoc like.author.displayName 1 Like

Why pay taxes at all ? See how great most African states run ...

Back in the 70s (and even early 80s) when taxes where quite high compared to todays standards US had a much better infrastructure and people still had more money to spend and less dept !!! 

GaryRMcCray
GaryRMcCray

One of our problems has always been that the governments reliance on special tax based revenues (alcohol, tobacco and gambling come to mind) results in the government supporting things that it's constituents are not necessarily in favor of.

People who don't drive still support gas tax because both their alternate transportation and goods shipped to (and from) them still generally operate in this revenue stream.

However, gas tax does generate an anti-environmentally and non conservation oriented political agenda and the concept of "punishing" people who purchase the most efficient transportation available is patently absurd in our current world situation.

GaryRMcCray
GaryRMcCray like.author.displayName like.author.displayName 2 Like

One of our problems has always been that the governments reliance on special tax based revenues (gambling comes to mind) results in the government supporting things that it's constituents are not necessarily in favor of.

People who don't drive still support gas tax because both their alternate transportation and goods shipped to (and from) them still generally operate in this revenue stream.

However, gas tax does generate an anti-environmentally and non conservation oriented political agenda and the concept of "punishing" people who purchase the most efficient transportation available is patently absurd in our current world situation.

robertrosen_ec
robertrosen_ec

The $100 fee for electric cars isn't entirely novel -- Washington State has established that rule.


zoner
zoner

@robertrosen_ec 

Yup....it's true....and krazy legislators in Olympia are also floating trial balloons to raise the gas tax.