Fossil Fuel Fiesta in Alexandria

Fossil Fuel Fiesta in Alexandria

Governor proposes gas-tax holiday, but will Virginians benefit?

A majority of savings from Gov. Glenn Youngkin's proposed three-month gas tax holiday would not go to Virginians according to data compiled by the Institute on Taxation and Economic Policy and the Commonwealth Institute. By looking at the experience of Illinois and Indiana, the groups determined that the oil industry and out-of-state drivers would drive into the sunset with a majority of the benefit. That would leave Virginians with an estimated 46 percent of the profits.

"If we get rid of the state retail gas tax, which is around 26 cents per gallon, the price of gas would not automatically go down by 26 cents per gallon," said Chris Wodicka, a senior policy analyst at the Commonwealth Institute. "So that difference would effectively go to oil companies for them to add to their bottom line."

Rather than pass savings along to motorists, oil producers would end up raking in about a third of the profits. But that doesn't mean Virginia drivers will get to reap the rest of the benefits. Because Virginia is a tourist destination with three interstate highways, about a quarter of the remaining savings would be taken by people who don't live in Virginia.

"A significant slice of Virginia's gas tax isn't paid by Virginians in the first place. It's paid by tourists headed down to Williamsburg or Virginia Beach. It's paid by truckers headed up and down I-81, passing along their higher transportation costs to, in many cases, out-of-state residents."

A HISTORIC $2.6 billion surplus created a massive windfall for lawmakers, who are usually fighting over dwindling resources. This year, though, they got to fight over how to spend a giant pot of money. Republicans argued for tax cuts; Democrats pressed for services. Lawmakers left town last month without coming to an agreement, and then the governor suggested a three-month gas tax holiday.

“Virginians need tax relief and it’s time for the General Assembly to act on the multiple tax relief proposals," said the governor in a written statement. "With gas prices and inflation squeezing families’ pocket books across Virginia and the nation and with over $1 billion in unanticipated revenue in our transportation fund, the General Assembly must act now."

Sen. Scott Surovell (D-36) briefly tried a parliamentary move he hoped would have prevented lawmakers from considering any bill introduced by the governor during the special session. But after a consultation with Republican Lt. Gov. Winsome Sears, who has the power to rule the amendment out of order, Surovell abandoned his amendment to the procedural resolution. After lawmakers left town, Sen. Steve Newman (R-23) and Del. Tara Durant (R-28) introduced legislation on behalf of the governor to implement a three-month gas tax holiday.

"Higher gas prices really hurt people, and people really notice it. It is so much more visible a tax than what's withheld from your paycheck," said Stephen Farnsworth, director of the Center for Leadership and Media Studies at the University of Mary Washington. "As a result, politicians have to be acutely sensitive to gas prices."

THE ESTIMATED COST of the three-month gas tax holiday is $437 million. The governor plans to pay for the holiday using money from the Commonwealth Transportation Fund, which is expected to take in $1 billion in unanticipated revenue. The bill seems poised to pass a Republican-controlled House, although Senate Democrats may end up rejecting the bill. Democrats say the Republican governor should not have called lawmakers back to Richmond when budget conferees had not yet reached a compromise.

“The governor thinks he’s still the co-CEO of a company — he’s not, he is the governor of the commonwealth of Virginia, and his glaring incompetence is beginning to harm Virginians,” said DPVA Spokesperson Gianni Snidle. “The governor is wasting taxpayer dollars to play political theater and it needs to stop."