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Virginia Senate Votes to Rescind Prius Tax

The much maligned "Prius tax", an annual registration fee for hybrid and electric vehicles to ensure they pay their share of road costs that was part of former Va. Governor Bob McDonell's landmark transportation bill last year, may soon be history.
January 24, 2014, 7am PST | Irvin Dawid
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Readers may recall that Virginia made headlines last year when then-Gov. Bob McDonell proposed doing away with the state's gasoline excise tax, the first to do so in the country, replacing the lost revenue with an increase in the state sales tax and new fees for hybrids and electric vehicles, dubbed the "Prius tax". The legislature agreed, although it added "a new 3.5 percent wholesale tax on motor fuels" and reduced the $100 hybrid fee to $64. The changes went into effect July 1, 2013.

"As well-intentioned as it may have been, Virginia’s hybrid tax was doomed from the start and, rightly or wrongly, will likely be remembered as a failed attempt by state conservatives to stick their finger in the eyes of greenies," writes Matthew Philips.

While not headline news, unless perhaps you own a hybrid or EV and reside in Virginia, "(o)n Monday [Jan. 20], the Virginia State Senate voted to repeal the [Prius] tax. The bill is now on its way to the Republican-led House of Delegates, which already passed a similar measure in subcommittee," writes Philips.

Though a bold experiment, the tax never made sense, both from an economic and political standpoint. It was supposed to generate only about $11 million in revenue, a rounding error considering McDonnell’s transportation package is projected to raise $1 billion in funding a year. 

Jim Nolan of the Richmond Times-Dispatch writes that "Gov. Terry McAuliffe said Monday that if the legislature passed a bill to repeal the hybrid car fee, he would sign it."

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Published on Tuesday, January 21, 2014 in Bloomberg BusinessWeek
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