The Governor proposes using over $437 million in unanticipated transportation revenues to support the gas tax holiday. Data released by the Bureau of Labor Statistics this week showed a 38.8% surge, year over year, in the gasoline index, and inflation on all items is at a 40-year high.
“Inflation, especially in energy and gasoline, is increasing because of failed policies by the current Presidential administration that constrain domestic supply. In addition, the conflict in Ukraine is further exacerbating the problem. These rising gas prices are hurting Virginians, and we need to do something about it,” Governor Youngkin said. “The Commonwealth Transportation fund has over $1 billion more revenue than anticipated this year and next, from the taxes paid by the people of Virginia. This bill gives money back to them in the form of a gas tax holiday.”
The Governor’s proposal would suspend the Motor Vehicle Fuels tax, which is 26.2 cents per gallon for gasoline and 27 cents for diesel, for three months, May, June, and July, and phase it back in slowly in August and September. The Governor’s proposal would also cap the annual adjustment to the gas tax at no more than two percent per year to further protect Virginians from the hidden tax increase of inflation.
Revenue from the tax, commonly referred to as “the gas tax” is deposited in the Commonwealth Transportation Fund along with a portion of the state’s sales and use tax.
The Commonwealth Transportation Fund, which funds maintenance and construction for all modes of transportation, is currently realizing revenue well-above forecast and has $671.4 million unanticipated revenue in FY22 and $457.6 million FY23.