Governor proposes eliminating gas tax; Raising sales tax from 5% to 5.8% (AP)

Posted: January 8, 2013

Associated Press

RICHMOND, Va. (AP) — Gov. Bob McDonnell wants Virginia lawmakers to eliminate the state gasoline tax and replace it with a sales tax increase of less than a penny on the dollar.

The swap is part of a five-year, $3.1 billion transportation funding plan unveiled by the governor Tuesday, a day before legislators convene their 2013 session.

If legislators approve, Virginia would become the first state to drop its gasoline tax. McDonnell says the 17.5 cents per gallon gas tax is no longer viable because of inflation and more fuel efficient vehicles. Replacing that tax with a 0.8 percent increase in the state sales tax and earmarking the revenue for transportation would raise $607 million over five years.

McDonnell also wants to increase the portion of the sales tax already designated for transportation.