Effort to repeal Virginia car tax crashes

Although the topic has roiled Virginia politics for decades, a state Senate committee has voted to defer until 2017 a proposed constitutional amendment that would eliminate the state's car tax.

But the proposal's sponsor, Sen. Chap Petersen (D-Fairfax City), was unfazed, and promised to keep building support for the measure. "I'll come right back in 2017," he said,

The Senate Privileges and Elections Committee voted unanimously on Tuesday to defer consideration of the car tax repeal along with amendments on same-sex marriage, gubernatorial term limits, redistricting, and voting rights for felons.

Petersen's proposed constitutional amendment, SJ 47, would eliminate the car tax on "privately owned motor vehicles used for non-business purposes." The tax would still apply to commercial vehicles.

In a press release, Petersen said he introduced the measure because the current car tax system is both burdensome to localities and unfair to motorists.

"The car tax has become the most complicated, confusing, and convoluted tax scheme we have in Virginia," Petersen said. "Car dealers are moving their inventory around to different jurisdictions to game the system, and ordinary people such as myself are paying hundreds of dollars on a car that may be unused."

In a separate bill, Petersen would give local governments the ability to impose a five-cent-a-gallon fuel tax to recoup lost car tax revenue. That bill, if approved, would not go into effect until the car tax repeal amendment is approved.

The car tax rocketed to political prominence in the 1997 governor's race, when Jim Gilmore made repeal his signature issue against Democratic nominee Don Beyer.

In 1998, the General Assembly approved a five-year phase out of the tax on the first $20,000 of a car's value. While individual car owners would see smaller tax bills, the state would reimburse local governments for the lost revenue.

In Gilmore's original plan, this new line-item in the state budget would act as a speed bump to expanded state spending.

But as the cost to the state rose, the General Assembly in 2002 capped car tax relief at 70 percent. In the 2004 session, legislators adjusted the cap once again, with the state permanently limiting car tax relief at $950 million a year.

In his final budget proposal before leaving office in 2009, then-Gov.Tim Kaine charged that legislators were not being serious about car tax repeal, and suggested eliminating the tax completely.

But Kaine also proposed giving local governments the power to impose a one percent income tax on residents to make up for lost revenue.

His ideas were swiftly dispatched in the 2010 legislative session.

Like all constitutional amendments, Petersen's car tax repeal must be approved in two, consecutive legislative sessions before appearing on the ballot. The earliest the car tax repeal could go before voters would be November, 2018.