Last night, as I watched the local news report on Governor Bob’s plan for transportation in Virginia, it sounded counter intuitive to me. I passed it off as an error on the part of the reporter or the fact that I was tired, and had perhaps missed some of the specifics. To my amazement, the Times-Dispatch had the same details: In his legacy year, the Guv wants to solve the thorny transportation issue by doing away with the gas tax and increasing the general sales tax.
The transportation problem is congestion: too many cars on the road. Are we supposed to believe that by reducing the cost of driving, fewer people will drive? Most elementary economic texts prove that when the price of something drops, consumers will buy more of it. The intellectual foundation runs counter to any economic thesis accepted across the full range of all economic theory.
The good Governor seems amazed that the gasoline tax of 17 1/2 cents enacted in 1986 buys fewer repairs and new roads. I guess he missed that lecture on inflation. A visit to the Labor Department’s present value calculator indicates that a tax of 37 cents in current dollars would be necessary to have the same buying power today. We know that the Teapublicans want to turn back the clock, but numbers don’t lie. The inflation rate is a fact, not a political football.
The Governor’s transportation plan is to argue in favor of a 0.8% rise in the General Sales Tax from 5.0% to 5.8%. The Sales Tax is one of the most regressive levies, falling disproportionately on the poor. Of course, what can we expect from a politician who throws free money at the owner on an N.F.L. franchise, while telling all state workers and school teachers to do more with less?
– Les Schreiber