(The Center Square) – Several Virginia tax increases will go into effect Wednesday after the Democrat-controlled General Assembly passed them in the previous legislative session.
Tax hikes to start the new fiscal year include a higher gasoline and diesel fuel tax, a higher cigarette tax and a tax on games of skill machines. Counties also will have more freedom to implement higher taxes on their residents because of legislation that eased state restrictions.
The statewide tax on gasoline will increase from 16.2 cents per gallon to 21.2 cents per gallon, which is a 31 percent increase before regional gas taxes are accounted for. The regional tax along the I-81 corridor, northern Virginia and Hampton Roads will now be a statewide tax. With this inclusion, taxes will increase to 28.8 cents per gallon, which is a 21 percent increase in areas that had the regional tax and a 78 percent increase in the areas that did not.
“The fuel tax hikes will have the greatest economic impact, removing dollars from both family and business budgets that might be spent somewhere else,” Stephen Haner, a senior fellow of state and local tax policy at the free-market Thomas Jefferson Institute, told The Center Square. “And, of course, the fuel taxes go up again next summer, and then every summer after that. In parts of Virginia, it goes up almost 13 cents per gallon [Wednesday] with another 5 cent increase next year.”
The cigarette tax will increase 100 percent Wednesday, from $3 to $6 per carton. The tax on other tobacco products, such as snuff and pipe tobacco, also will increase by 100 percent, from a 10 percent tax to a 20 percent tax. The commonwealth also will impose a new 6.6 cents per milliliter tax on liquid nicotine products used for vaping.
Although lawmakers initially sought to ban gambling skill machines earlier in the session, they decided to instead impose a $1,200 monthly tax on businesses that use the machines. The shift was designed to help raise additional state revenue amid COVID-19 losses.
County governments will have more freedom Wednesday to implement taxes, which will bring their authority closer to that of cities. County governments will be allowed to impose a meal tax up to 6 percent and begin to impose local taxes on admission to concerts, movies and other types of amusement.
“The ability of so many Virginia counties to now impose a meals tax would normally come second in terms of impact on individuals, and given their revenue problems, the counties probably love to do that now,” Haner said. “But with their restaurants struggling so badly, such a move now would be insane.”
Several new gun laws, including expanded background checks, red-flag laws and a limit to purchasing one handgun per month all go into effect Wednesday. The background check legislation and the one-handgun-per-month legislation are both facing a legal challenge.
Virginians no longer will need photo identification to vote, but still will need to provide documentation that shows their name and address.
Also as of Wednesday, a person found with only one ounce of marijuana now will face only a $25 civil penalty.