When Lily Franklin, the Democratic nominee in the 41st House of Delegates District, pushed for a repeal of Virginia’s car tax at a candidates forum hosted by Cardinal News at the Blacksburg Library last week, the move stunned political observers.
But no one was more surprised than Franklin’s Republican opponent, Chris Obenshain, a prosecutor from Montgomery County.
“It’s really interesting to hear Lily talk about reducing taxes, especially the car tax. That’s something that Republicans have tried to do 20 or 30 years ago, and then Democrats blocked it every single time,” Obenshain said at the event. “And now you want to talk about getting rid of the car tax? Give me a break.”
But Franklin stood by the proposal, which has been embraced mostly by Republicans since 1997, when Republican Jim Gilmore made repealing the unpopular tax a staple of his successful gubernatorial campaign.
“In Virginia we had a $5 billion surplus this past year,” Franklin said last week. “I think that it is time that we revisit the way we tax and start getting economic relief back to our working class and middle class families. Is it really necessary that we have a car tax?”
And Franklin, who is running the only competitive House race west of Richmond in a new district that covers parts of Roanoke County and Montgomery County, isn’t the only Democrat from Southwest Virginia vowing to eliminate the car tax during this election cycle.
Despite her repeated votes in favor of keeping the tax as a member of the Roanoke City Council, Trish White-Boyd, the Democratic nominee in the recently redrawn 4th State Senate District, came out in favor of the car tax repeal after securing her party’s nomination in June.
White-Boyd has even printed bumper stickers proclaiming “No Car Tax” — the same motto that Gilmore used during his gubernatorial campaign 26 years earlier. “It’s a regressive tax, and it is not a tax that is helping working class families,” White-Boyd said in a phone interview Wednesday.
The car tax is already being supplemented by the state, and with a historic budget surplus, “clearly we are not doing something right and we’re not helping the folks that need it,” White-Boyd said. “This proportionately affects us here in Southwest Virginia, because we all need a car to get to work, or to get our families to church.”
White-Boyd, who is vying to succeed retiring Sen. John Edwards, D-Roanoke, is facing Sen. David Suetterlein, R-Roanoke County, who was drawn into the same district, in next month’s general election.
The district, which now covers Roanoke, Salem, most of Roanoke County and part of Montgomery County, including Christiansburg, leans slightly Republican, which makes it an uphill battle for Virginia Democrats who have lost almost all representation in the rural Southwest.
Virginia’s car tax — a personal property tax imposed by localities on vehicle ownership — has been highly unpopular for decades. Each city and county regulates its own rate for personal property taxes. These property taxes are considered separate from the sales taxes that are placed on vehicles and other purchases.
When he assumed office in early 1998, Gilmore — making good on his campaign promise — immediately pushed for legislation reducing the car tax. The Personal Property Tax Relief Act, which the Democratic-controlled legislature passed during a special session that May, wasn’t an outright elimination of the tax, but a gradual phasing-out that stopped short of a complete repeal after Gilmore left office.
“People still object to it, they still don’t like it,” Gilmore said of the car tax in a phone interview last week. “It would be a very good tax cut to implement for working people, particularly people of modest means who are trying to make ends meet during a time of inflation. There’s plenty of money, and I think this is the time to completely phase out the car tax and restore the cuts.”
The Gilmore-backed 1998 legislation eliminated the taxes on all cars valued at less than $1,000 while phasing it out incrementally on auto values over $1,000. Localities would collect the tax only on vehicle valuations exceeding $20,000, and the state would reimburse those cities and counties for its lost revenue.
The five-year phase-out period began in 1998 with a 12.5% reduction of car tax liabilities. In 1999, the reimbursement amount increased to 25%, which appeared as a deduction on car owners’ tangible personal property tax bills, and the state transferred the amount of the deduction to the localities to make them whole.
The phase-out continued with a 47.5% reduction in 2000, and it jumped to 70% in 2001. Under the 1998 legislation the plan was set to be completed with a 100% reduction in 2002. But that year the GOP-dominated legislature — with the support of new Gov. Mark Warner, a Democrat — froze the relief rate at 70% due to rising costs to the general fund amid a downturn in the national economy that accelerated in the aftermath of the Sept. 11, 2001, terror attacks.
“When I was the governor I left a balanced budget, which would have completely phased out the car tax,” Gilmore said. “But the Democratic caucus entirely, combined with a few renegade Republican senators, changed the formula and they changed the way from a percentage phase-out, which is what I was doing, into a strict dollar amount with a cap on it.”
That change guaranteed that the car tax would not only remain, but that it would increase over the years, Gilmore said. “I think that the public has noticed that when I left office the car tax was at 70%, and it’s not at 70% anymore. And the reason is because of the formula change that the Democrats and the renegade Republicans put into place.”
A new study published by Wallethub in February shows that Virginia car owners are now paying the highest average vehicle property tax in the country. The study found that owners who pay taxes on a car with an assessed value of $26,000 will spend $1,039 annually — which is more than $100 higher than the annual taxes in Mississippi, the second most expensive state.
White-Boyd, the Democratic nominee in Senate District 4, said that a repeal of the car tax would be particularly beneficial for residents in her district due to the lack of alternatives to personal vehicles.
“In Northern Virginia, they have mass transportation. You have buses, subways, you have all kinds of methods of transportation, and you don’t necessarily have to own a car. But in rural Southwest Virginia, you have to have a car,” she said.
White-Boyd added that with a $5 billion surplus, the state could fully fund the elimination of the car tax. “I don’t want to impact the localities, I know that we use this money to supplement our budget,” she said.
“I think that phasing it out altogether and supplementing our localities to make sure that they don’t lose any funding is the right thing to do, because Richmond has failed us since Gilmore. And I’m not talking about just the Republicans, but also the Democrats, I’m talking about both sides, they had the opportunity to fix it but didn’t.”
Gilmore agreed that the time to restart the car tax cut has never been better.
“Frankly, there is enough money to finish it right now, and I would advocate that,” he said. “There is no stress on the budget, it is quite healthy and there is a giant surplus. I think some or all of that money ought to be applied to finish the car tax right now.”
Still, Gilmore said he was surprised to hear of Franklin’s and White-Boyd’s support for the car tax repeal.
“If the Democrats are embracing that in those districts out there, I applaud that,” he said. “And I would encourage the Republicans to grab that issue, because it’s always been a Republican issue.”
However, Suetterlein, White-Boyd’s Republican opponent, said in a phone interview Thursday that White-Boyd’s evolved position on the tax cut was disingenuous.
“I think it would be great if Councilwoman White-Boyd actually supported car tax relief, but instead she has voted four times to keep the tax and increased car tax bills in Roanoke City 31% over her four years on the council,” he said.
The car tax, Suetterlein added, is “a 100% local tax,” and White-Boyd and her city council colleagues had the full power to end it. “She was completely silent on the idea during the Democratic primary, and she has definitely been silent on the idea when she could actually do something about this.”
Roanoke’s budget, he said, increased more than $35 million last year, “which incidentally is the same amount of car tax that Roanoke citizens pay.”
When asked if he supported the car tax repeal, Suetterlein referred to legislation he carried in 2022 with Del. Joe McNamara, R-Roanoke County, that makes it easier for localities to provide car tax relief by allowing rebates on the tax. “Several localities started providing car tax relief after that,” Suetterlein said.
Even if Franklin and White-Boyd are elected, their plan to repeal the car tax would face an uphill battle within their own party, which has pushed back against more permanent tax cuts. Del. Don Scott, D-Portsmouth, the Democratic minority leader in the House of Delegates, did not respond to several emails asking whether his caucus would back proposals seeking to repeal the tax for good.
And Del. Sam Rasoul, D-Roanoke, currently the only Democrat from Southwest Virginia in the House, cautioned that eliminating the car tax would leave other important projects, such as public education, unfunded.
“Anytime you make a permanent tax cut of that size, you’re going to have to pull from something long term, and what we have seen is that the car tax cuts have made things much more difficult over the years,” Rasoul said.
While he would consider all legislation that would make life easier on the working middle class, “the reality is that anytime you want to cut something on the tax side you have to be ready to cut on the expense side,” he said.
“Even with the budget surplus, which is temporary in nature, we could offer temporary support to folks,” Rasoul added. “But when you cut something like a car tax, you’re making a permanent cut. And Virginia has suffered through decades of the underfunding of critical infrastructure, like our schools, our teachers and critical services like mental health, because we have been led to believe that these cuts are good for society. But the reality is, it’s not sustainable long term.”
Even Gov. Glenn Youngkin, who has made tax relief a priority during his first two years in office, did not single out the repeal of the car tax specifically as a part of that effort, although last year he signed legislation allowing localities to cut car taxes and urged them to lower their rates.
“The governor welcomes any legislative proposal that lowers the cost of living for Virginians and understands why residents are so frustrated with their high car taxes,” Youngkin spokeswoman Macaulay Porter said in an email.
Gilmore, however, said that he wasn’t surprised that no Republican governor after him, including Youngkin, has championed the car tax repeal.
“Governor Youngkin hasn’t embraced it because it still is my signature piece, people still talk to me about it today everywhere I go,” Gilmore said. “It’s truly a Gilmore program, and every governor wants to have his own signature initiative. And that is what Governor Youngkin is doing, he is doing his own signature tax cuts, which I applaud.”
When asked whether he could have done anything to keep his signature legislation intact, Gilmore admitted that he didn’t fight hard enough when it was at risk.
“At that time I made a political mistake,” he said. “I was very proud of the car tax cut that we had implemented, and I was just as proud that I had brought in Republican majorities in the House and the Senate for the first time, because I wanted to transform the politics of the state.”
But 21 years later, Gilmore said he recognizes that at the time he was “reluctant to engage in the fight” because he “wanted to protect the new Republican majorities that I had brought in.”
“In the end, the Democrats, the renegade Republicans and Governor Warner were all fighting me on the car tax cut, and I should have engaged and fought them all back, and I would have won,” Gilmore said. “Because it still is a good issue today.”
Video of the campaign forum between Lily Franklin and Chris Obenshain is now available through Blue Ridge PBS’ ECHO streaming service.
Cardinal is sponsoring a campaign forum Oct. 19 between David Suetterlein and Trish White-Boyd. All seats are taken but you can sign up to be on the wait list. The event will also be livestreamed on Cardinal’s YouTube channel, with assistance from the Virginia Tech School of Communication.