RICHMOND TIMES-DISPATCH: GOVERNOR JIM GILMORE:
IS THE CAR TAX CUT GOOD FOR VIRGINIAN'S, OR ISN'T IT?
Op-Ed by Governor Jim Gilmore, Richmond Times-Dispatch
December 7, 2014
RICHMOND, VA - In recent days, there has been much hand-wringing over budget woes in the Commonwealth of Virginia. As we await Gov. Terry McAuliffe’s proposed budget, the tax-and-spend chorus in the Virginia General Assembly is laying the groundwork for rolling back the car-tax cut, thereby raising taxes on working Virginians who use their cars to get to their jobs and care for their families.
In 1997, I was elected governor of Virginia on a platform of cutting taxes, specifically to cut the car tax to help all Virginians who owned or wanted to own a car. The car-tax cut passed the 1998 General Assembly as a five-year phase-in with overwhelmingly bipartisan support.
The budget plan was for a five-year phase-in to completely eliminate the car tax. Unfortunately, after I left the governor’s office after my four-year term, the phaseout was halted and a remnant of the car tax remains today.
When I left office in 2002, I proposed a balanced budget, as required by law that included the car-tax cut. However, in 2004, Gov. Mark R. Warner and his allies in the General Assembly froze the car-tax cut at $950 million. That same year, Gov. Warner and the General Assembly complained that the car-tax cut deprived them of revenue, and so they raised taxes $1.36 billion over two years, by raising Virginia’s sales tax.
Think of the billions of dollars taken from the people of Virginia over the past 10 years because of that sales-tax increase. Now, voices in the General Assembly want to grab the car-tax cut back from these same taxpayers in order to fuel additional spending. They’ve already been paid once for the car-tax cut; now they want to be paid again.
When I proposed the car-tax cut in 1998, the budget of Virginia was about $18 billion. Now the initial budget for 2015 is projected to be about $47 billion. Since 2002, not one additional cent has been appropriated to car-tax relief. In fact, since car-tax relief was capped in 2004 and car prices have risen, the percentage allotted for car-tax relief for the taxpayer has declined. This is a deliberate cheat on the taxpayers of Virginia.
A whole string of falsehoods are being put forward to justify the proposed increase of the car tax on Virginia taxpayers. Sen. Emmett W. Hanger Jr., R-Augusta, said the car-tax cut favored the rich and those with more expensive cars. Sen. Hanger knows good and well that the car-tax benefit was capped at a car value of $20,000, requiring those who owned more expensive cars to pay more, not less.
Neal Menkes, fiscal analyst for the Virginia Municipal League, claims that the car-tax cut siphons off revenue that pays for “essential local services.” The truth is that the localities have been reimbursed 100 percent from the state for forgoing the car tax money, at least until the General Assembly capped the reimbursement. The localities lost nothing. In fact, this is the very money the General Assembly proposes to take from the localities right now.
Sen. Richard L. Saslaw, D-Fairfax, asserts that the car-tax cut has deprived the public schools of $4 billion over the past 12 years. He knows good and well that the General Assembly provides generous funding to public education every year. He also neglects to mention that during my administration lottery proceeds were taken away from the General Assembly and dedicated entirely to public education, creating $5.5 billion of additional education funding over the past 14 years.
Virginia has lost its way. The car-tax cut was put forth as a way to improve the lives of regular Virginians. We wanted to help younger Virginians who had to put their car tax on their credit cards. We wanted to help poorer Virginians who owned little else but their cars.
We wanted to help working Virginians driving to and from their jobs. We wanted to help mothers taking their children to and from day care, so they could work their jobs to support their families. The cut is meaningful to our citizens and, still, to this day, they thank me for initiating this most-needed tax cut. Is the car-tax cut good for Virginians, or isn’t it?
Car-tax relief is good for our people and should be continued, and the phaseout of the tax completed. We should construct a budget in Virginia that reassesses spending and completely eliminates the car tax once and for all. Then we should do a genuine tax reform that shares revenue with the localities that makes sure that local needs in law enforcement and education are met.
Gov. McAuliffe has said the current economic downturn has produced less revenue for our state. This is a challenge, but also a real chance to re-evaluate spending in our state, often driven by lobbyists, special interests and those seeking personal advantages.
This moment should not be an excuse for the tax-and-spend crowd to increase taxes once again. Sen. A. Donald McEachin, D-Henrico, when asked whether he favored a reduction or a complete rollback of the tax cut responded, “Either.” If the people of eastern Henrico end up paying the car tax, it will be because of the vote of their senator. If the people of Fairfax end up paying the full car tax, it will be because of the vote of their senator, Richard Saslaw.
It’s a good moment for the people to know who is on their side, and who really cares about the tax burden on people trying to make ends meet every day. This is a time for reckoning in Virginia.
Jim Gilmore, a Republican, served as the 68th Governor of Virginia. He is the Honorary Chairman of GrowthPAC.
NOTE: This article originally appeared in Richmond Times-Dispatch. Click HERE to read it online.
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