Virginia Transportation Funding Deal

HOV access for hybrids is no longer very good in VA. It was good for a while, and that probably explains some of the Prius popularity in VA. Perhaps also it might help explain the negative feelings of the legislators targeting hybrids for excess taxes.

Gen2 Prii (2004~2009) may still enjoy HOV "grandfather" access on key roads like I66. Virginian's have to pay about $25/yr for special clean fuel license plates for HOV, which I never did because we never needed HOV access.

 

Took my first shot at developing a Virginia auto tax calculator (Excel tool) today.
For a Prius (mine sort of).

Year Value $ 960 Sales Tax
0 24000 $ 600 Prop Tax-1
1 20400 $ 420 Prop Tax-2
2 17340 $ 347 Prop Tax-3
3 14739 $ 295 Prop Tax-4
4 12528 $ 251 Prop Tax-5
5 10649 $ 213 Prop Tax-6
6 9052 $ 181 Prop Tax-7
7 7694 $ 154 Prop Tax-8
8 6540 $ 131 Prop Tax-9
9 5559 $ 111 Prop Tax-10
10 4725
$ 3,662
Total Tax w/o Fee 15.3%
Total Tax $100/yr 19.4%

I found the Prius depreciated only 15% rate which results in a 10-yr effective sales tax of 15.3%, and 19.4% tax rate if the new $100/fee is added in. By comparison, a typical non-hybrid at $20,000 cost at 25% depreciation rate would see about a 11% cumulative sales tax ($2310 tax). That means a Prius is paying $1350 extra taxes without the new fee, and $2350 more taxes with new fee, compared to an equivalent non-hybrid model.

In other words, low depreciation rate is another hidden Prius tax in VA since property taxes are based on blue book value.

Don't even try this for Highlander Hybrid you will get sick at the extra taxes due to the progressive nature of the property tax (5% over $20k value). Luckily a Prius value drops below $20000 in the first year or so (60% tax relief under $20k).

BTW this does not include the avoided road tax (Fed+State) estimated at $35/yr in VA for hybrids. Just saying we are already paying more in taxes.

BTW: Value = Cost x (1-depreciation)^time, yrs

 

Related to Post#63, yesterday I recommended to elected officials that VA localities considering adopting tax relief for clean cars. This is already part of state law that allows various car property tax relief scenarios. Hey my delegate actually called me! and she owns a Prius.

Arlington County already does this:
http://www.arlingtonva.us/departments/ManagementAndFinance/budget/file76410.pdf

The above discussion indicates the Arlington clean car tax relief is ramping down to a modest level but I think still represents ~$100-200/yr tax relief. It is possible this info is out-dated (2010).

 

Here is my latest letter to editor (Wash Post), based on all these recent calcs I have been doing above. The Post has not published my first letter, but in a subsequent Post editorial, they said the VA hybrid fee was "nonsensical". So I hope I am at least influencing them.

 

Yes all Special Clean Fuels Cars in VA are impacted. But the tax has been dubbed "Prius tax" and I think it hurts Prius hardest. This letter I guess has the hidden implication someone is targeting Prius. Which I wonder? But the real reason for the crazy tax is generally thought to be to send the taxes to Northern VA which just happens to own lot of Prii (for some reason).

 

Mike I don't know if you though the above was too harsh, anyway I rewrote today. I think I like this version. Submitted to Washington Post...so far no luck in actually getting published.

As far as I know, I am the only person who has a VA car tax calculator. So I can make these calculations. Also, my very first letter to the editor 30 yrs ago was titled, Officials Get Decisions Backwards, so I am borrowing that theme.

 

Great tip!!!
Where'd you hear it?
We thought we were going to move, now we think we stay in VA (not because we like the politics I assure you). So that's why we never paid in advance like that.

Hope you went to NoHybridTax.com to vote no too.

 

Here is the best detailed analysis of the VA Transportation bill I have seen:

Follow the money in Virginia's transportation bill - Greater Greater Washington

...not mention the hybrid fee, and if you want to move out of here, and why not, the crazy politicians also put a tax on moving away from Northern Virginia!!! ($1500 bucks on a $500K house sale)

 

Sage- I appreciate any feedback I can get on the analysis.

I am trying to describe it both ways, total tax $4500 on a Prius held for 10-yr, equivalent to almost 20% sales tax, and the tax difference vs. equivalent non-hybrid is $2000-$3000. The lower end ($2000) is for $20K Hybrid and the higher end ($3000+) for something like a Highlander Hybrid, because our prop tax hits expensive cars harder. Basically a conventional Prius is approaching 20% total tax (19.4%) by my calcs, whereas a non-hybrid car woud be more in the 11-12% range total tax.

All of these numbers assume 10-yr holding car and adding the new $100/yr fee. Its hard to understand because VA is one the only states where you cannot calculate your total car tax ahead of purchase.

 

Fore I think you are voicing the correct emotion, but:
> A lot of people think this fee will be scrapped in a few years.
> Keep in mind we elect a new Gov this year, and the Dem candidate owns an electric car company
> See the Tip above about registering 3 yrs in advance right now (DMVNow.com)
> Your region property tax could be better than NoVa (typically approaching 5% here)
> Some localities give hybrid tax relief (Arlington is only one I know)
> Go to NoHybridTax.com to sign petition

>>However, I totally agree if this stands long term then we need an Elantra, however better yet a car like my Minivan which lost blue book value rapidly

P.S.- My calcs are a little disturbing because no one but me has a Virginia car tax calculator. I plan to release it here. What I am doing is exposing the magnitude of the total tax. Historically this big car tax was a HUGE problem for Virginia, forcing people to go out-of-state to buy cars, but then Gov Gilmore stopped it in 1998, but then Gov. Warner in 2002 reversed Gilmore's reduction phase-out, and slowly creeping up on us is the old bad car tax problem in VA. This time we have Internet however.

 

^^^yes sorry if it took me 1000 posts to convey what you just said

also add in 4% sales tax that is +$160 from the start
For Prius, there are 2 elements to a larger property tax hit: +$4000 and low depreciation

In other words, Prius is already a cash cow for Virginia. Now they are pushing it into la la land excessive tax, and people who were happy, are going to be a little sadder.

 

I am getting ready for the end-game of this battle, when Gov McDonnell signs the hybrid fee into law (by March 23). He has the option to amend or veto but he is still telling the public that hybrids are not paying their share of road taxes.

Yesterday I sent a long email to Jay at Plug In America.
Jay is one of the key lobbyists for plug-in vehicles. I was hoping my analysis helps Jay to frame a response when the bill is signed by Governor McDonnell. I saw Jay's response to the Washington state EV charge of $100, and realized I had better let him know VA situation is a different tax dynamic.

If the Governor signs the bill, I think our communication probably needs to be along these lines:

The public has been told that hybrids are not paying their fair share in Virginia, but the truth is hybrids are already paying about $1000-$2000 more taxes over 10-yrs, I figure. My points would be:
(1) the hybrid fee is unfair; and (2) the reason it is unfair is that hybrids are already paying more taxes (assuming about +$4000 cost difference over a non-hybrid). Prius in particular is already hurt harder in VA because it retains value so well (higher property tax each year, it is already a cash cow for Virginia).

I would hope the Governor could make this communication himself, but sounds like he is not going to, therefore this needs to be the long term communication in my view. Possibly also could say, in view of the convoluted auto property tax system in VA, there needs to be a study of the tax system. The other thing that is a total mess are the HOV rules for hybrids in VA (see me if you want a good article on that). In short I see the need for a comprehensive reform in these areas.

 

^^^Thanks Richard for talking to your representative. Let's see what happens this week. Keep our fingers crossed. I still have one last move (hopefully).