Virginia Gov. Glenn Youngkin announced Wednesday that he is proposing legislation for the state’s upcoming special session that would suspend the state’s gas tax for three months.
Youngkin’s proposal would use over $437 million in unanticipated transportation revenues to support the gas tax holiday, his office said. Data released by the Bureau of Labor Statistics show that a 38.8 percent 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,” 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.”
According to the governor’s office, the legislation would suspend the Motor Vehicles Fuels tax of 26.2 cents per gallon for gasoline and 27 cents per gallon for diesel for May, June, and July. The tax would be slowly phased back in over August and September.
The proposal would also cap the annual adjustment to the gas tax as no more than two percent per year to protect Virginians from inflation, the office said.
While revenue from the tax is deposited into the Commonwealth Transportation Fund along with a portion of the state’s sales and use tax, the fund is currently realizing revenue well-above forecast, the governor’s office said, and has $671.4 million in unanticipated revenue in FY22, and $457.5 million in FY23. The funds are used on maintenance and construction for all modes of transportation in the state.