Lower Gas Tax, Higher Sales Taxes July 1

By William Callahan

Beginning July 1, Virginians will see cheaper prices at the pump but higher prices at stores as tax changes go into effect in the Commonwealth. 

Under Gov. Bob McDonnell’s transportation bill, taxes on a gallon of regular gas will decrease about 6 percent.

That means instead of 17.5 cents per gallon tax, Virginia motorists will be paying about 11.7 cents per gallon in taxes on the average wholesale price of unleaded gasoline, according to the Virginia Petroleum, Convenience and Grocery Association.

SALES TAX

While the sales tax rate in Northern Virginia will increase from 5 percent to 6 percent, the rest of the Commonwealth -- including the Fredericksburg area -- will see a sales tax increase from 5 percent to 5.3 percent.

According to the state, the rate increases will only affect general retail sales, not the price of food for “home consumption.”

MOTOR VEHICLE SALES TAX

Virginia's motor vehicle sales tax is also set to increase from 3 percent to 4.3 percent and residents will have higher annual fees for hybrid cars.

McDonnell’s controversial transportation bill could raise $880 million a year for roads and mass transit.