I don’t find myself agreeing with much that former Virginia Lt. Governor Bill Bolling – a conservative Republican and Trump supporter/voter – has to say these days. But I strongly agree with him on this topic – namely, that ditching the car tax, which as Bolling correctly explains is a LOCAL tax that is crucial for those localities (ditching it “would cause local governments in Virginia to lose about $3 billion a year in revenue”). Also, as Bolling points out, Winsome Earle-Sears “is obviously staking a great deal of her gubernatorial campaign on eliminating the car tax,” despite the fact that this is simply “a political gimmick” and “horrible policy.”
I could add other reasons why this is “horrible policy” (in fact, I have – see here for a short discussion of “Pigouvian” taxes” – “a tax designed to correct for negative externalities, which are costs that are imposed on society but not reflected in the market price of a good or service”), other than the huge and fatal one of depriving localities of billions of dollars in revenue – with no plausible way to make it up. That’s just nuts, not to mention WILDLY irresponsible, whoever proposes it.
Winsome Earle Sears is obviously staking a great deal of her gubernatorial campaign on eliminating the car tax.
This has been tried before, way back in 1998, and it didn’t work. Why? Because it quickly became apparent that the state could not afford to reimburse local government the money they would use if car tax revenues suddenly went away.
You see, the car tax is a local tax, not a state tax. When the state starts talking about eliminating a local government revenue source you should be skeptical.
Estimates are that eliminating the car tax would cause local governments in Virginia to lose about $3 billion a year in revenue.
This is money local governments use to fund schools, law enforcement, fire departments, rescue squads, mental health and other social services programs, parks and recreations, and more.
When Sears or any other politician starts talking about eliminating the car tax you should ask: “How are you going to replace the lost revenue to local governments?”
It’s highly unlikely they will have an honest answer to that question.
Will they use existing state revenues to make local governments whole? No, because they need/want those revenues to fund state programs.
Will they empower local governments to tax something else to make up for the revenues they lose by eliminating the car tax? Probably not, but even if they did, how does exchanging one tax for another tax benefit you?
Or would they just take the money away from local governments and let them fend for themselves? That would be a $3 billion disaster.
You see, the promise to eliminate the car tax is a political gimmick. It may be good politics, but it is horrible policy.
Sears needs to come up with some compelling reasons that people should to for her. But trying to resurrect the 27 year old promise to eliminate the car tax is not one.
