Experts: Gas tax shift means Virginia will attract thrifty drivers

By |
Local,DC,Transportation,Liz Essley,Taxes,Metro and Traffic,Energy Department

New legislation to change D.C.'s gasoline tax would ensure that Virginia remains the place to go for Washington-area drivers seeking a cheap fill-up, transportation experts say.

The D.C. Council gave initial approval to a change that would scrap the city's 23.5-cents-per-gallon tax on gasoline for an 8.3 percent tax on wholesale gas, following the lead of neighboring Maryland and Virginia, which also overhauled their gas taxes earlier this year. Because the council included a limit on how low that tax can go, drivers would be paying the same or more, but not less, in taxes at D.C. pumps in years to come.

"Pump prices will likely stay around the same for the time being or increase by a cent or two in the District after enactment," said AAA Mid-Atlantic spokesman John Townsend.

But because the tax will be recalculated twice a year based on wholesale costs, the city's gas taxes could keep rising, said Townsend.

Transportation experts expect Virginia prices to stay low and Maryland's to climb under their new plans.

"Virginia will remain one of the cheapest places in the country to buy gasoline," said Townsend. "In the out years, Maryland will become one of the most expensive places in the country to buy gasoline and will likely surpass D.C. with some of the highest gas prices around."

D.C.'s prices currently top its neighbors', with gas costing an average of $3.74 per gallon on Tuesday. Maryland was at $3.52, and Virginia averaged $3.39.

D.C. Council Chairman Phil Mendelson, who crafted the tax change, said he wants the District to keep earning transportation revenues as cars become more fuel-efficient and drivers buy less gas. He said he doesn't expect the change to affect pump prices immediately.

"We tried to make it revenue-neutral," said Mendelson. "Other states are moving toward this."

The D.C. Council is expected to vote again on the measure in June.

In the long-term, wholesale gas taxes in the region should mean that D.C., Maryland and Virginia have a steady stream of transportation income that doesn't plummet with the disappearance of gas guzzlers, experts said. But taxing a wholesale percentage means that taxes are now tied to the energy markets, and that means jurisdictions won't know how much money they'll bring in.

lessley@washingtonexaminer.com

"That's kind of the big problem -- we don't really know what's going to happen over time, given that the markets are global and that the District is so tiny," said Robert Puentes, an infrastructure expert at the Brookings Institution. "Whether or not there are going to be price spikes or an overall decline, we just don't know."

View article comments Leave a comment
Author:

Liz Essley

Staff Writer - Transportation
The Washington Examiner