BY JEFF E. SCHAPIRO
Media General News Service
Published: May 9, 2008

A liberal think-tank says if Virginia raises taxes for transportation, it should provide relief for those least able to afford them: the working poor.

The Commonwealth Institute, in a study released yesterday, said that proposals to increase the sales and gasoline taxes will disproportionately hit those earning less than $18,000 a year.

According to the institute’s projections, for a Virginian with an income of $17,900, a 10-cent rise in the fuel tax — now 17.5 cents per gallon — will cost another $32 per year.

A penny increase in the sales tax — currently a nickel on the dollar — cuts earnings by $67.

Michael Cassidy, director of the institute, says the General Assembly should offset these increases with tax breaks, including a refundable sales-tax credit.

“These are all regressive taxes, not based on people’s ability to pay,” Cassidy said during a news conference at the General Assembly Building.

That, Cassidy said, means Virginia’s working poor will be paying more for necessities, such as food, fuel and clothing.

In its inaugural study last summer, the institute correctly predicted a $1 billion shortfall in the state budget.

The legislature returns to Richmond on June 23 for a third attempt in as many years to fashion a long-term fix for transportation.

Last year’s road-and-rail package has been gutted of nearly $600 million.

It was trimmed by $65 million with the repeal of unpopular bad-driver fees.

And a Virginia Supreme Court decision means regional authorities in Hampton Roads and Northern Virginia cannot issue about $500 million in bonds for transportation improvements in those traffic-clogged areas.

Jeff E. Schapiro is a staff writer for the Richmond Times-Dispatch.