New Gas Tax? Here's Why VA, DC Could Pay More At The Pump: Report

WASHINGTON, DC — Several mid-Atlantic and northeastern states, including Virginia and the District of Columbia, are mulling a cap-and-trade plan that could see drivers paying more at the pump. The states and DC would direct the revenues from the plan toward mass transit projects designed to reduce carbon emissions, which may include mass transit, electric-vehicle charging and other transportation infrastructure.

The plan calls for gasoline and diesel wholesalers to pay the states for emissions allowances. Critics fear the wholesalers will simply pass the new costs directly through to consumers, and are calling it nothing more than a gasoline tax, according to Politico.

The other states invested in the plan, called the "Transportation and Climate Initiative," are Connecticut, Delaware, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Maine and New Hampshire.

According to the Institute on Taxation and Economic Policy, Virginians pay 21.95 cents per gallon of gasoline, while DC drivers pay 23.50 cents a gallon. That included all state and local taxes and fees as of Oct. 1.

Gasoline taxes have been a robust and reliable source of revenue for states, but the country's speedy shift into greener transportation is giving them pause. Many state legislatures are growing leery regarding the long-term viability of taxing fuel receipts as the electric car market continues to flex.

The scribes drafting TCI prefer the term "allowances" rather than tax, saying their "cap-and-invest" program would work like this:

• Placing a "cap" on carbon pollution from burning fossil fuels in the transportation sector to reduce transportation emissions.
• Requiring large gasoline and diesel fuel suppliers to hold allowances for the pollution that results from the combustion of the fuels that they sell to consumers.
• Bringing in proceeds that can be used to fund programs such as increasing public transit.

David Blackmon, an independent energy analyst/consultant, criticized the plan in a Forbes column, calling it a "regional gas tax scheme."

"Everyone involved knows that those wholesalers will pass along those costs to consumers, but the vast majority of consumers will never understand why the cost of filling their cars suddenly went up," he wrote. "They'll just see a higher cost at the pump and — conveniently, for the governors involved — most will just blame it on that evil conspiracy by 'big oil' to make those 'windfall profits.' "

The states see it as nothing quite so sinister, and lawmakers will weigh in on the final draft and any increased taxes.

Republican in Virginia’s General Assembly opposed the move to join both TCI and the nine-state carbon-trading network known as the Regional Greenhouse Gas Initiative, putting language in the budget that prohibits spending money on the RGGI connection. Democratic Gov. Ralph Northam did not veto that budget language, reports the Virginia Mercury. But with this week's election of Democratic majorities in both houses of the Virginia legislature, the door is open to change next year.

If the states approve TCI, the 10-year program of reducing emissions would start in 2022 and continue through 2032.

Written by Rich Kirby/Patch Staff with additional reporting by Deb Belt/Patch Staff