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Jeff Branscome writes about Spotsylvania County.

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Del. Mark Cole explains VRE gasoline tax

I received an e-mail from Del. Mark Cole yesterday explaining to me how the 2 percent VRE gasoline tax works.

Although the tax is still be paid by the end consumer, it is slightly lesss than if it were imposed on the retail price because the retail price is more than the wholesale price. He used this example:

Say a wholesaler sells gas to the retailer for $2 a gallon. The retailer then marks the price up by 20 cents to cover his costs, so his price before the tax is imposed is $2.20. Then the retailer imposes the 2 percent VRE tax on the $2.20, so the consumer pays $2.244 per gallon, including .044 in VRE tax per gallon. That’s how it currently works. 

 

 With the new methon, say the wholesaler’s price is still $2 a gallon, but now he must collect the 2.1 percent VRE tax, so he sells it to the retailer for $2.042 per gallon, including the .042 in the VRE tax collection. The retailer adds his 20 cents per gallon mark up and the end price per gallon is $2.242 compared with $2.244. Minor, but hey, it’s a little cheaper. 

 

 

 Cole says:

 

So in the end the consumer ends up paying slightly less in taxes (.002 per gallon in this example).  The only way the consumer would end up paying more is if the retailer’s mark up was less than 5 percent, which according to testimony by industry lobbyists before the committee is not the case.

 

 

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Permalink: http://news.fredericksburg.com/spotsygovt/2009/08/20/del-mark-cole-explains-vre-gasoline-tax/