Sunday, January 28, 2007

Gas tax-the lesser of many evils (but still evil)

This is how many a good conservative gets run out of town on a rail. See, we stand for limited government, and low taxation. We look at a Virginia state budget which has increased by double digits year after year, we see billions spent for non-government purposes, and we know that there is plenty of money collected to fund our transportation needs, if it wasn't all being spent on pet projects and vote-buying schemes.

But taxes WILL be raised for transportation. And if all we can say is "no new taxes", when there WILL be new taxes, we have no voice in which taxes are raised. And while raising taxes at all would be wrong, there are some taxes which are much more harmful than others.

So when Senator Colgan published a survey, and gave HIS arguments for a gax tax, I had to agree with him on one point -- if you WERE going to raise a tax dedicated to transportation, the gas tax is the one.

And if the only problem is our surplus is in the wrong bucket, lets raise transportation taxes AND CUT THE SALES TAX. It was the sales tax increase that was unnecessary -- since it was passed, almost 100% of the extra tax has been surplus, the remainder also being surplus but being pushed into new spending that wasn't previously "needed".

Anyway, this is the title of my Potomac News column for January 25 -- "Gas tax-the lesser of many evils":

Gas tax-the lesser of many evils
Potomac News
Thursday, January 25, 2007

For several years now (ever since then-Gov. Mark Warner passed the largest tax increase in history), Virginia has experienced record tax surpluses. And yet almost nothing has been done to address what every official in Virginia knows is one of our biggest issues, transportation. Instead, we were told that none of the overflowing coffers of the "general fund" could be used to fix the roads.

Fortunately, Gov. Tim Kaine has finally come clean on that issue, proposing $500 million from the general fund for transportation. Unfortunately, that is not enough to cover the backlog of existing projects, much less make progress in alleviating the chronic traffic woes of Northern Virginia.

Some argue the general fund should only be used for core services. But transportation is surely a core service of state government. The entire state benefits from having a reliable transportation infrastructure. We all depend on roads for the food we eat, the goods we buy, for access to services. Traffic nightmares discourage business investment, and business drives our economy, provides jobs, and makes our state a growing, vibrant place to live.

We don't need new taxes. However, it's clear the legislature won't change the budget structure, now or in the foreseeable future. And since existing transportation taxes won't fund the improvements that are necessary and overdue, the question is what taxes we are going to raise to meet that funding.

So, let's raise transportation taxes, and CUT the sales tax back to pre-2004 levels, or cut the income tax. This solves several problems. It removes the temptation to spend the surplus. It provides the "steady revenue stream" transportation needs. It lessens the impact of fluctuations in the "unreliable" general tax revenue, by lowering the amount of money expected from revenue streams that may dry up in lean years. It balances new transportation taxes with cuts in other taxes. And it keeps transportation spending out of the general fund.

But what taxes should we raise? The proposal to increase the business property tax rate is a horrible idea that should be rejected. It's easy to tax business, because they are a smaller voting block, and don't write many angry letters to the editor.

Besides, any county would die to get a new business built on vacant property, because the tax revenue far exceeds the costs in roads and other county services. Plus, a local business employs people, who then don't need to commute to other counties clogging up the roads.

Raising property taxes on business discourages investment, drives up costs (which are passed to customers), and makes Virginia businesses less competitive against business from other surrounding states. A business doesn't make money based on the value of the real estate it occupies, but on the goods and services it provides to the community. Property taxes aren't based on the ability of an owner to pay, and a higher property tax on business will make things worse, not better.

There are also proposals to increase the sales tax on cars, and increase driver and vehicle license fees. But as State Sen. Charles Colgan noted in a recent opinion column, none of those taxes collect money from people from other states who use our roads. Other than converting to toll roads, the best way to get money from people using the roads is to increase the gasoline tax. Coupled with a decrease in the state income tax or sales tax, we could collect more money without increasing the tax burden on the average citizen.

The new tax revenue should be distributed based on transportation use. This could be determined by periodic surveys of total people-miles traveled, counting both driving miles and miles by public transportation. Transportation money should be sent to where people are being transported.

I'm not happy about increasing taxes. We had more than enough money the last few years, and much of it was squandered rather than used to address our real needs. Kaine's promised "transportation lock box" is nowhere to be found. There is little hope that the sales tax increase will be repealed. But if a tax increase is inevitable, a gas tax increase is the least bad way to do it.


Anonymous said...

The gas tax is the worst tax in existance. It effects the people who have to work and have to drive to get to work the most. The rich are not effected and those that have mass transit are not effected. Just the poor rural slobs that keep the country humming pay through the nose.

Roci said...

Annon. It doesn't really matter who is effected, but you are wrong. Everyone is effected by a gasoline tax. goods and services travel by road to the consumer. The cost of that fuel is passed along. If you eat, you pay this tax.

The gas tax is fair in that it charges those people who benefit from roads for road use. (it also will subsidize mass transit so people who are not paying the tax will REALLY benefit).

The problem with it is that Virginia politicians do not recognize the concept of "dedicated funds". New gas tax money will simply displace previously allocated general fund spending. No net increase results. Any surplus in gas taxes is still available for school teacher pay raises, museums and whatever Richmond thinks is best, just like last year.