Thursday, January 31, 2013

Governor's plan is worth a try

I've been mulling Gov.Bob McDonnell's new transportation funding plan, and I've had some trouble making up my mind. I see advantages and disadvantages, but in the end have concluded the idea is worth giving a try. At least it's a daring, original proposal that, given some problems, is better than any other I've heard.

McDonnell's plan would eliminate Virginia's tax on gasoline, making us the only state without such a tax. In place of the lost revenue, the commonwealth's sales tax would rise from 5percent to 5.8percent, and vehicle registration fees would go up. Taxes on diesel fuel, powering the big trucks that cause the most wear and tear on the roads, would remain unchanged. The new revenues would be earmarked for transportation projects, a significant need throughout the commonwealth.

Reaction to McDonnell's idea has been mixed. Some commentators — folks who've never met a tax they didn't like and can't imagine that one should ever be lowered — immediately became gainsayers. Absolutely — raise the sales tax! But keep the gas tax the same. Actually, raise that, too. No level of taxation can ever be considered high enough.

Meanwhile, other people immediately jumped on the bandwagon, envisioning lower prices at the pump. Cheaper gas — who can argue with that? They seemed to have missed the higher sales tax in the equation. I suppose there are people who drive a lot but never buy much else in the way of consumer goods, but for most of us this won't save us money overall. If we pay less at the pump, we'll pay more at Walmart.

As a rule, I favor low taxes, frugal spending and limited government. But when it comes to roads and bridges, most people consider these core government services. Our current infrastructure needs repair. Good roads are a necessity of a modern economy, and even if a taxpayer never drives a car, he derives benefit from a good transportation network. Probably everything in your house was at some time moved over a publicly funded road in Virginia. If you need an ambulance or a fire truck, you don't want it falling through the nearest bridge before it gets to you.

It would be nice if leprechauns showed up and expanded Interstates 64 and 95 for free, but I wouldn't hold my breath.

I also believe sales taxes, which hit consumption but not income or savings, can be useful generators of income, and that state taxes are generally less onerous than federal levies. After all, if a state gets too greedy, it's easy to move to another. Just look at California the last few decades.

I recognize the need to raise some revenue and appreciate McDonnell's argument that the gas tax is moving toward eventual obsolescence. As cars become more fuel efficient and alternative fuels become more feasible, gas tax revenues will drop. Read that way, McDonnell's initiative might be considered a forward-thinking plan to get ahead of the curve.

I certainly prefer the governor's idea over another that is being kicked around, mainly on the federal level: a "vehicle miles traveled" tax. This system would track the miles you drive and charge you accordingly. In other words, it would involve the government tracking where and how far you drive — a little too much Big Brother for my taste. Besides, isn't the existing gasoline tax already in effect a tax on the mileage you drive?

Yet I can understand some of the objections to this proposed plan. Eliminating the gas tax would shift the burden away from out-of-state drivers, who fill up in Virginia, to residents. But of course, travelers spend money on sales-taxed merchandise as well, so they would pay into the commonwealth's coffers in other ways. Raising the sales tax is also said to be regressive, costing the lower income levels more. But don't the rich buy more stuff, and more expensive stuff?

There are other practical drawbacks to McDonnell's plan. Balancing his numbers relies on collecting sales tax on certain Internet transactions, and doing that depends on the dysfunctional Congress passing a law enabling states to collect such levies. Critics also run the numbers and find fault in the optimistic accounting. But a cynic might ask: When does government bookkeeping ever correlate to the real world?

I have no illusion that McDonnell has single-handedly solved all of Virginia's transportation problems, but his idea deserves serious consideration. He's at least envisioned a different approach — and that's an improvement over continuing to do what isn't working well anymore.

Long is a Roanoke Times columnist and director of the Salem Museum.

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