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Virginia gas tax hike goes into effect Friday

A gas pump at the 76 Gas Station on Langhorne Rd. in Lynchburg, Virginia. Wednesday, June 22, 2022. (Credit: Mia Nelson/WSET)
A gas pump at the 76 Gas Station on Langhorne Rd. in Lynchburg, Virginia. Wednesday, June 22, 2022. (Credit: Mia Nelson/WSET)
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In the middle of already-soaring gas prices-- and the holiday weekend ahead-- on Friday, gas taxes in Virginia are set to rise.

It's the result of legislation passed two years ago to fund the state's transportation needs.

It's about two more cents per gallon. On Thursday, the state tax on regular gas in Virginia was 26.2 cents, and on Friday, July 1, it will be 28 cents. That's a 7% increase.

Michael O'Conner, the president of the Virginia Petroleum and Convenience Marketers Association, said in 2020, lawmakers passed legislation that increased fuel taxes.

SEE ALSO: How to get your $250 or $500 Virginia tax rebate

Now, a provision of that law is kicking in that increases gas taxes by the percentage increase in the consumer price index.

O'Conner said because Consumer Price Index is up over 7%, that's what's going to be reflected as of July 1. He said though, you likely won't see the increase right away.

"It's important to remember that the gas that's in the stations today (Thursday) will be taxed at the old rate, and it's going to take some time for that product to be moved through the system and to be sold at retail. So, you're probably not going to see that change immediately," O'Conner said.

Sen. Steve Newman said he wanted to cap the state's gas tax indexing to 2%. That was in a bill he carried this session that also would have suspended the state gas tax completely for three months.

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"I hear from working Virginians all the time just how much they're struggling at the pump, and just how desperately bad many of them wanted to have the gas tax holiday that Governor Youngkin sent down and I carried on the floor of the Senate," Newman said. "Unfortunately, that was rejected, and instead of that, we're going to have another 7% increase that's going to occur on July 1st. To me, that's going to be very tough for working Virginians."

However, democratic Sen. John Edwards said he doesn't see this increase having a direct impact on consumers, saying it's an indirect tax at the wholesale level.

He said this tax is going to help fund much-needed improvements in infrastructure across Virginia.

"We need to fix the roads and that's why we're having the gas tax, and part of it is the increase based on the consumer price index because the cost of building roads has increased, and so the cost of maintaining the roads, the cost of expanding roads is continuing to go up." Edwards said.

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This increase will impact more than regular gas. O'Conner said this will impact products across the board like diesel, alternative fuels, and the storage tank fee.

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