It is never a surprise to read that a politician wants a tax cut, knowing that everyone would like lower taxes (sure!). Usually though, politicians do not mention the consequences of a cut. Either services would be lost, or revenue would need to be obtained from another source. Cutting the car tax is a good example, with a local politician recently calling for its demise without mentioning what would happen to the local government services it supports.
The car tax is used to support things such as police and fire protection, public green spaces, recreational areas, libraries and schools. Is anyone against these things? So – only fair if calling for ending the car tax would be identifying what to do without those funds. Cut police protection? Charge for visiting a park? Our local government offices run on very lean budgets now – and cutting their budgets would necessarily mean that they would need to cut their services.
It is clear that the current economic outlook for the country is uncertain, even to the point of having our national credit rating recently downgraded. The state and national economies were very strong in 2024, which resulted in Virginia’s current budget surplus. This year we simply don’t know, and our Governor acknowledged that the state budget may be hit with additional demands by cutting the budget to increase the reserve. Perhaps a prudent thing to do (and he is talking about cutting it more), but the cut already is hurting us locally. As mentioned a couple of weeks ago, the Virginia Tech-Carilion School of Medicine and Fralin Biomedical Research Institute had its expansion budget stopped – even when there is a clear need for more physicians.The expansion also would have provided many jobs and helped our local economy.
At the federal level, the current budget bill being considered by the Senate would greatly decrease funds for medical care locally, which would have an enormous impact on rural areas such as ours where many people use Medicaid. The state and local governments would need to meet new responsibilities – but how could they do this while also receiving less revenue from a repeal of the car tax? The numbers simply do not add up. And local and state governments cannot legally run budget deficits, unlike the federal government that can print money and increase the national debt.
Something rarely discussed with the car tax is that it affects the well-off the most. It is based on the value of a vehicle – so those with an expensive vehicle pay more. Obviously, folks with larger incomes tend to have more expensive cars (certainly with exceptions), so they would have the most to gain by eliminating this tax. Even If we cut taxes that affected everyone, such as the 1% tax on food, those who have lower incomes would benefit the least because they spend a high proportion of their income on food. Taxes that charge based on value – including property tax on homes, boats and cars – are a good way to protect the little guy. I know of few people who favor helping the highest earners avoid more taxes at the expense of everyone else – which is what repealing the car tax would do. It would be great not to pay taxes – but we need police, and firefighters, and good schools.
Whenever I hear a politician talk about cutting taxes, I always want to also hear how exactly we are going to fund needed services and programs. Are you hearing that from your favorite politicians? I hope in the future those who call for reducing a tax also will describe what it will cost the community – either in the way of lost services or how more revenue will be obtained.
