How the transportation bill will impact your wallet
RICHMOND, Va (WTVR) – The Virginia General Assembly has passed a historic transportation bill that re-frames how the Commonwealth will pay for its road upkeep. But how does this new funding structure affect your wallet?
As a part of the legislation, which passed with bipartisan support in both the House and Senate, the state sales tax will increase from its current level of 5 percent to a new rate of 5.3 percent.
At the new rate, a purchase of $100 dollars would see an additional 30 cents in taxes. Several customers at the Target store on West Broad Street Saturday told CBS 6 they think they will see the increase add up when doing looking at their monthly budget.
“I think it’s a necessary evil. We need the improvements to our infrastructure,” Mitch Carlson said. ”People can control what they spend.”
Another aspect of the bill that could directly affect consumers is the change in Virginia’s gas tax.
Currently, the sale of gasoline is taxed on a per gallon basis at a flat rate of 17.5 cents. Under the new transportation legislation, the fixed tax would be eliminated and replaced with a tax on the wholesale price of gas on a percentage basis.
Wholesale gasoline would be taxed at a rate of 3.5 percent. Experts say prices may go down initially, but could fluctuate regularly since the new tax is based on wholesale costs.
“Going down the road four or five years, it’s impossible to predict will those taxes by higher or lower,” Mike O’Connor, President of the Virginia Petroleum, Convenience and Grocery Association, said.
The new legislation will also increase the costs of buying a new car, and charge hybrid car owners a $100 fee annually.
Legislators said the purpose of this bill is to help improve Virginia roadways by better funding future projects. Still, some seem to feel it is up for debate how successful this bill will be in doing so.
“If they are going to actually take that money from the taxes that are being increased and actually get the roads done then it’s not a problem,” Quantez Russell said, who lives in Suffolk.
“There’s a lot of problems I see with it that won’t go to fix the things that need to be fixed,” Tom Thompson said.
If Governor Bob McDonnell signs the bill into law, the new tax rates would take effect July 1st.