Governor Bob McDonnell, in one of his final acts as governor of the Commonwealth of Virginia, signed into law a $5.9 billion tax increase on Virginia families to fund light rail and transportation projects throughout the Commonwealth. The tax increase is the largest in the history of Virginia, edging out Democrat Governor Mark Warner’s 2004 tax increase.
Virginians will see increases in their diesel fuel taxes and the gas tax will rise with higher gas prices and inflation. Residents of Northern Virginia and Hampton Roads will see increases in the local sales tax from 5 to 6 percent, increases in taxes on home sales, and increased hotel taxes. The rest of the state will experience a sales tax hike from 5 to 5.3 percent.
In addition, the legislation puts into place a regime set to collect internet sales taxes if Congress passes the Marketplace Fairness Act – currently in the House of Representatives (where, as written, it is not expected to garner enough votes to pass). If Congress is unable to pass an internet sales tax bill, Virginia residents will see fuel taxes raised even higher to make up for the promised tax collections.
Despite claims from Governor McDonnell and Speaker William Howell, the massive tax increase is not a job creator and does not make the Commonwealth more attractive to small business and families looking to relocate.
“As Bob McDonnell signs his name to House Bill 2313, he signs into law higher taxes and signs away his chances at higher office. It’s a crushing blow to the Average Virginian who won’t actually be able to get to work any quicker,” stated Americans for Tax Reform’s president, Grover Norquist.
He continued, “Don’t be fooled. VDOT has no incentive to efficiently spend this new revenue and it is only a matter of time before Democrats cry for more tax dollars to pay for even more special interest projects that don’t benefit the average family or small business owner.