Virginia's quarter. It'll take more than a pocket full of these to pay the $100 annual tax.

Virginia's quarter. It'll take more than a pocket full of these to pay the $100 annual tax.

The Virginia General Assembly voted to move forward with some controversial legislation (HB2313), that would abolish the state’s gas tax and replace it with a hike in sales tax.  There's no direct (Indirect? Yes.  The state's sales tax will increase) impact to owners of plug-in vehicles in this section of the legislation, but buried deeper in the legal paperwork is some wording that will surely light a fire for owners of plug ins who reside in Virginia.

First, we'll briefly explain the gas tax to sales tax legislation.  In Virginia gas is currently taxed at a rate of $0.175 per gallon.

Beginning July 1, 2013, the gas tax will vanish and a 3.5% sales tax on the "statewide average wholesale price of a gallon of self-serve unleaded regular" gas will appear.

Diesel fuel will be taxed at 6%, which the legislators say is higher due to the destruction done to roads by heaving-hauling diesel rigs.  Those taxes are levied at the "wholesale" level and don't actually apply to consumers.  But, according to words buried deep in the bill, consumers will foot part of the tax in two ways:

  • Increase Virginia’s sales tax from 5 percent to 5.3 percent.
  • Raise the motor vehicle sales tax from 3 percent to 4.3 percent.
Gas this, diesel that.   Let's move on to electrified vehicles.

The bill includes an annual road-use fee that now seems to be popping up in several states across the US.  The bill calls for an annual license tax of $100 per vehicle on all highway-capable electrified vehicles registered in Virginia.  This includes hybrids, plug-in hybrids and electric vehicles, as well as natural gas, propane and hydrogen-fueled automobiles.

Why include conventional hybrids?  Well, the legislators must be assuming that since most hybrid burn less fuel, then the sales tax revenue will be low, so a road-use tax will make up the difference.  It's basically double taxation on hybrid and plug-in hybrids then.  It's estimated that 91,000 electrified vehicles are on the roads in Virginia, with the vast majority being conventional hybrids.

The Virginia House of Delegates approved the measure by a vote of 60 to 40 and the Senate passed it with a vote of 25 to 15.

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