A higher sales tax on new cars in Virginia could cost drivers hundreds of dollars, in an effort to fund more than $1 billion in road repair and construction across the Commonwealth.
Governor Bob McDonnell proposed raising the auto sales tax from 3 percent to 4.15 percent Tuesday, an amendment to his landmark roads bill that passed the General Assembly.
The original proposal called for raising the tax on new cars, the title tax, to 4.3 percent. Auto dealers and consumers expressed wide-spread opposition, and staff from Governor McDonnell's office said Tuesday their concerns were heard.
"This is the largest tax increase on titling I think we've seen since the 1960s," said Bob Farlow, general manager of McGeorge Toyota in Henrico. "If you're buying a Prius that costs $25,000, you would be paying $300 more because of the hike."
The funds from the tax would be reserved for new highway construction and repair. The revenue will contribute to the first agreement in a generation on how to fund the Commonwealth's extensive road system.
The Governor lowered the proposed tax hike to diminish concerns that the higher cost of buying a new car could harm Virginia auto sales.
The decision will be given the green light or rejected when the General Assembly returns to the Capitol in April to vote on amendments.
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