With Congress looking unlikely to pass a measure to let states tax internet sales, Virginia lawmakers November 10 approved an increase in the state sales tax on gasoline from 3.5 to 5.1 percent to fund transportation investment.  Lawmakers also transferred $50 million in sales tax revenue from the General Fund back to the state’s transportation fund.

The original legislation that increased transportation investment in Virginia, approved in 2013, was contingent upon Congressional authorization of a bill which would grant states the ability to institute a sales tax on internet purchases made from out-of-state websites. If passed, Virginia planned to dedicate funds from the internet sales tax to transportation projects. If the federal government failed to pass this legislation by 2015, the transportation bill stated that Virginia will increase the motor fuels tax on gasoline by 1.6 percent. With concerns that the internet tax bill will not be passed this year, Virginia lawmakers approved the gasoline sales tax increase.

Maryland has also tied state transportation funding to the elimination of the internet sales tax ban. If Congress does not pass such legislation, Maryland’s three percent sales tax on the wholesale price of gasoline will increase by another two percent.