RICHMOND, Va. — Virginia drivers can expect to see a 5 cents-per-gallon increase in the cost of gas starting Jan. 1.
The increase on wholesale gas, which will likely be passed on to consumers at the pump, will help pay for a $6 billion transportation funding package passed under former Gov. Bob McDonnell last year.
The gas tax increase was the state’s backup plan. The transportation package originally relied on passage of a federal bill that would allow Virginia to collect sales taxes from out-of-state online merchants.
The legislation has been approved by the U.S. Senate but has stalled in the House in large part to opposition from U.S. House Rep. Bob Goodlatte, who represents the Shenandoah Valley in Virginia 6th Congressional District.
Goodlatte said the sales tax legislation, known as the Marketplace Fairness Act, is flawed and it was foolish of state lawmakers to count on revenues from a bill that hasn’t become law.
“I warned state officials last year that this was a very complicated issue that has been a topic of debate for nearly 15 years and that they should not assume legislation would be enacted within their time frame,” Goodlatte said in a statement. “The General Assembly was shortsighted in passing a transportation package with funding dependent upon the assumption that fundamentally flawed federal legislation would be enacted.”
The Marketplace Fairness Act has broad bipartisan backing, as supporters say it helps brick and mortar stores compete on a level playing field with online sellers. A group backed by retailers recently launched TV ads in Goodlatte’s district intimating that without the law, the China-based e-commerce giant Alibaba would put local small business owners out of business.
Melissa Palmer, owner of the gift shop in Roanoke, said the current system puts her at an unfair advantage against out-of-state online competitors.
“I might ask (customers) if they want a receipt but I don’t get to ask them if they want to pay sales tax,” she said.
Some conservative lawmakers have opposed the Marketplace Fairness Act on the grounds that they see it as a new tax.
Under current law, Virginia operates on a de facto honor system in which Virginians are supposed to self-report their online purchases and pay any taxes owed, though few actually do. The National Conference of State Legislatures estimated that Virginia lost $422 million in 2012 by not collecting sales taxes on remote sales while all 50 states combined lost more than $23 billion that year.
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