Virginia Business Groups Back Road Taxes

Thu May 08, 2008 - Southeast Edition

RICHMOND, Va. (AP) Twenty-five of the state’s most influential business lobbying groups are backing new statewide taxes for highway upkeep and repair.

The coalition, including retailing and construction associations, recommended increasing the gasoline tax or the sales tax or both to cover soaring costs for road and bridge maintenance.

The statement, issued by the Virginia Chamber of Commerce, provides support for Gov. Tim Kaine less than a week before he plans to unveil a transportation bill and call a June legislative session to consider it.

Kaine and fellow Democrats in the Senate say costs of maintaining roads are exceeding money allocated for by greater amounts each year.

Because state law puts a priority on maintenance, money appropriated for new road projects is detoured to cover maintenance cost overruns.

Proceeds from the taxes should fund “basic maintenance of Virginia’s existing roads and bridges in order to stop the loss of highway construction and transit revenues to maintenance,” according to the statement.

The statement said the statewide taxes should be devoted solely to road, rail and transit improvements, and should be in addition to regional plans to fund new projects in the state’s most populous regions — northern Virginia and Hampton Roads.

Besides the sales and fuel tax, Kaine has also mentioned boosting the sales tax on automobiles from 3 percent to 5 percent to match the levy on all other retail sales.

Kaine was happy with the input, said his press secretary, Gordon Hickey.

“He was looking for input and here are people concerned and involved in the process. This is the kind of thing that helps,” Hickey said.

Republican House of Delegates leaders have flatly rejected a statewide tax increase and accused Kaine’s administration of inflating maintenance deficit projections to justify higher taxes.

House Majority Leader H. Morgan Griffith, R-Salem, said he was not surprised that a coalition representing road contractors, real estate agents, developers is asking for a tax increase from which they stand to benefit.

“These are folks who never come out and advocate that we place a tax on them, on their interests,” Griffith said.

Since 2000, real estate and development organizations have contributed nearly $49 million to candidates for statewide office and legislative seats and their political action committees, according to the Virginia Public Access Project. Only one other sector, political and leadership committees have given more over the period.

Other organizations that signed on to the statement include those representing local governments, school teachers, fire chiefs and hospitals.

Griffith said imposing taxes of any kind in a stagnant economy with unemployment is rising and gasoline prices are hovering around $3.55 per gallon and rising is wrong. But the taxes that the statement recommends are regressive, he said.

A “cents-per-gallon” boost in Virginia’s 17.5-cents-per-gallon gasoline tax is a diminishing revenue source because of the greater fuel efficiency of cars and because prices have forced motorists to drive less.

“So people who can’t afford the new fuel-efficient cars pay more for gas so that people who can afford them get to drive on new and better highways,” Griffith said.

A sales tax boost, he said, disproportionately hurts low income people who spend a greater share of their money on necessities than the wealthy.

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