You're watching...
Virginia Gov. Bob McDonnell on his plan to eliminate the state gas tax while raising the sales tax.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
Very interesting proposal from Virginia's -- Paul -- He wants to eliminate the seventeen point five cent state tax on -- one gallon of gas instead to make up the lost revenue.
He would raise the sales tax from five to five point 8% give back that take via.
Well governor Bob McDonnell joins -- now crumb Virginia governor welcome -- the program.
Thanks there are good morning.
-- it's I mean are you doing this to drive down the price of gasoline and make Virginia more attractive.
All are you doing it because you gotta raise more revenue and the best way to do that is to make -- make it up with the highest sales taxes.
What do you do it.
Well it's a little above but the big reason I'm doing it is we've got huge infrastructure problems and Virginia like most of the nation.
Northern Virginia Washington DC is been rated as they both adjusted place in the nation.
And says Stewart the gas taxes on a long term decline for obvious reasons that a flat rate with inflation and alternative fuels.
And and -- higher fuel efficiency it's gonna be at a declining sorts out.
Our thought is look -- -- get -- of an outbreak there was something that grows because of economic growth the sales tax.
And make that transition right now that's only a piece of -- we're gonna is general fund and some other.
Our rate of things that they slightly agrees all of that will help build roads -- Virginia.
So what what about the philosophy of this though -- -- This is that you're you're raising consumption taxes when we consume anything in Virginia we gotta pay more attack -- on it.
And the argument is that back hit poor people fall mall that it would hit the wealthy all our -- -- wealthy people.
That is regressive what do what -- say that argument.
Well actually the -- it's not accurate because the gas tax is.
More regressive than the -- stacks -- -- we had tea.
Leading economic.
Report come out about a week and a half ago saying exactly that people in rural areas drive more.
And so -- actually be paying -- less under this proposal.
Secondly is economic benefit will be well below -- gas prices probably on the East Coast of not a country.
So everybody drive -- 95 from Maine to Florida gonna stop in Virginia by gas.
As hopefully by some things that tabor sales factors -- I think there be some other fringe benefits to us.
By doing that and long term we'll have a more reliable growth source of revenue.
It's a very interesting idea because there's there's a whole lot of attention being paid right now to this the taxation levels in different states and the idea of moving -- a business to a state which offers a favorable tax regiment.
How much extra are you gonna -- use by raising the sales tax from five to five point 8%.
Well its revenue neutral essentially revenue neutral in the first years Stuart that's that video of it.
It's -- from gas to sail -- with gas going down in sales going up.
Over five years it's an actor of 600 million dollars are so -- new revenue but again that's only -- -- some of their other components of our transportation.
Plan a lot of reform I look at this -- tax reform as you say other governors are doing.
But it dealing with infrastructure which -- quality of life which is more time with your family which is credit more jobs -- your state.
Is a challenge it every governors haven't this is our solution there were proposing here -- -- Obama.
