Tuesday, May 13, 2008

Kaine Proposes Tax Increase

Yesterday, at a news conference in Richmond, Governor Tim Kaine (D) unveiled a proposal to increase taxes in order to raise money he says will help solve Virginia’s transportation problems. The proposal calls for hitting Virginia residents with $1.1 billion in new tax revenues and fees to build and repair roads.

The tax measures include increasing the sales tax by a full cent in Northern Virginia and Hampton Roads. The Governor says that the increase in the sales tax would not include food and medicine. Kaine also recommended a statewide, $10 increase in annual vehicle registration fees and a 1 percent rise in the sales tax on new car sales. Kaine has long called for an increase in the so-called car titling tax which now stands at 3 percent. He is also proposing to increase the grantors tax by 150% to 25 cents. This is a tax that sellers pay on the sale of a home. Currently it is assessed at 10 cents per $100 of assessed value.

In a news conference yesterday Governor Kaine told reporters that an increase in taxes was necessary, and that without it the state would run out of money to build roads. Kaine said, “The General Assembly needs to act because its reputation is at stake, and the reputation of our state is at stake." He went on to say, “This plan will improve safety, it will provide relief to the two most congested parts of Virginia and it will provide a change in choices for commuters.”

Kaine said his plan would allow for a $50 million increase in annual funds for Metro and $25 million for Virginia Railway Express. It would also result in money to improve Rt. 7 in Fairfax and route 28 in Loudoun County.

The General Assembly has tried for several years to deal with transportation funding. Last year they were forced, by their constituents, to repeal the unpopular abusive-driver fees, then the state Supreme Court struck down the regional taxing authorities which the Legislature set up to fund transportation. The court ruled that the taxing authorities were unconstitiotal because only the elected legislature can raise taxes, not an unelected panel.

Now the Governor unveils his plan, which at least so far doesn’t have much support in the General Assembly. Fairfax Del. Dave Albo (R-Fairfax) said the plan has “0.000 percent chance" of winning approval. House Minority Whip Del. Kirk Cox (R-Colonial Heights) told reporters, “"I don't see anything positive in the governor's plan that makes it something that's likely to be considered, he went on to say, “It's all tax, tax and more tax.”

Senate Majority Leader Richard Saslaw (D-Fairfax) has his own reservations about the plan saying it doesn’t do anything to tax motorists living outside the state, but share’s the Governor’s view that something needs to be done to put money in the state’s coffers.

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