Both gubernatorial candidates, Democrat Abigail Spanberger (right) and Republican Winsome Earle-Sears, have pledged to tame — if not slay — this dragon if elected governor. (Photo by Charlotte Rene Woods/Virginia Mercury)
Show of hands: who loves paying the yearly tax on your personal automobiles?
Don’t be shy. Raise those hands. Anybody?
As Virginians, it’s perhaps our most galling duty: paying hundreds of bucks (thousands for folks with bougie rides) to your city, county or town government for the responsibility of owning a depreciating asset you pay through the nose to buy, insure, fuel and maintain.
According to the Tax Foundation, Virginia is among 27 states and the District of Columbia where tangible personal property taxes are assessed. Fourteen states broadly exempt personal property from taxes; 10 allow de minimis exemptions.
Our car tax is a much-reviled but long-lived creature. Both gubernatorial candidates, Democrat Abigail Spanberger and Republican Winsome Earle-Sears, have pledged to tame — if not slay — this dragon if elected governor.
Twenty-eight summers ago, a candidate for governor and his team of advisers identified and harnessed this resentment in arguably the most effective three-word campaign mantra in Virginia history: “NO CAR TAX!”
That was Jim Gilmore, a Republican whose 1997 gubernatorial campaign realized somewhat by accident that the issue was lightning in a bottle during a rally in Roanoke.
“I came off the stage in Roanoke and said, ‘What was that?’” Gilmore said in an interview Monday, describing the crowd’s ovation to his line about ending the hated tax. “The roar was unearthly.”

He and his campaign brain trust — Boyd Marcus, Ray Allen and Steve Horton — knew they were onto something. They had already staked out positions supporting elevated state educational standards and hiring more teachers in addition to lowering taxes. The pledge to 86 the tax, however, stuck like Velcro and dominated the 1997 campaign.
It was so potent that Gilmore’s Democratic opponent that year, Lt. Gov. Don Beyer, went from deriding it as a political parlor trick to offering his own scaled-down “me too” car tax reduction plan in the dying days of his campaign.
Gilmore cruised to a 13-percentage point victory and did something unprecedented: led the Republican Party to its first sweep of Virginia’s three statewide executive branch offices. The late John H. Hager of Richmond was elected lieutenant governor and state Sen. Mark L. Earley of Chesapeake was elected attorney general.
Gilmore’s mandate was convincing enough that the General Assembly — with Democrats clinging to tenuous majorities — passed his plan as a full, five-year phaseout of the tax on the first $20,000 of a car’s value beginning with a 12.5% cut in 1998. The state reimbursed local governments for their lost revenues with direct payments from the state’s general fund, collected largely from income and sales taxes.
Things went well for three years, but time, the economy and global events were not on Gilmore’s side, and they validated Beyer’s admonitions. By 2000, an irrationally exuberant economy built on an overheated, nascent online services industry was collapsing on itself, hitting Washington’s tech-heavy Northern Virginia suburbs — the commonwealth’s economic mainstay — particularly hard. It showed up in Virginia’s general tax collections beginning in fiscal year 2001.
The women running for governor both say they’re ready to end Virginia’s car tax, at long last. Whoever wins, she better show up with a convincing political mandate and a lot of really smart advisers. She must be ready to work insane hours and endure ceaseless frustrations and efforts to sabotage this intricate, delicate endeavor.
– Bob Lewis, Virginia Mercury columnist
In the 12-month budget year that began July 1, 2000, and lasted midway through Gilmore’s final year in office, general fund collections fell $253 million (-2%) below the revenue estimate on which state spending was predicated. By fiscal year 2002, the shortfall ballooned to $1.26 billion (-12%) below the forecast, causing alarm across Capitol Square, particularly within the GOP-led Senate Finance Committee where Democrats and Republicans coalesced against Gilmore’s phaseout.
Virginia could no longer afford to play shell games with local and state revenue without endangering core obligations including public education, public health and public safety. In January 2002, Gilmore turned the Executive Mansion over to Democrat Mark Warner. Weeks later, the General Assembly froze car-tax reimbursement at 70%. In 2004, in a tax restructuring package Warner muscled through a balky GOP legislature, Virginia capped its total car tax reimbursement at $950 million annually starting in tax year 2006 and unchanged since.
Two decades later, the issue simmers anew thanks to soaring post-pandemic car valuations that are inflating car tax bills even on older vehicles. The women running for governor both say they’re ready to end Virginia’s car tax, at long last.
Whoever wins, she better show up with a convincing political mandate and a lot of really smart advisers. She must be ready to work insane hours and endure ceaseless frustrations and efforts to sabotage this intricate, delicate endeavor.
Says who? Says Gilmore, the OG of car tax relief, who hopes the next governor completes what he started.
“Once you get into the technicalities of doing it, it’s extremely difficult because it is not a state tax. It is a local tax. And that is a problem that has to be solved,” he said.
Yes it is, and the rates are all over the place from county to county, city to city, town to town and even special taxing districts within many of those jurisdictions. For instance, an analysis of personal property tax rates for 2023 shows that the median county rate was $3.54 per $100 of assessed value, but rates that year ranged from $9 in Pittsylvania County to 55 cents in Bath County. Toss in the fact that some localities offer waivers for elderly, low-income and disabled residents and you can see how hard finding an equitable formula for such a crazy quilt of tax policies would be.
Gilmore said experience taught him that the solution is not to nibble around the edges by scaling back the tax on a prescribed range of valuation then repaying localities.
“I’ll tell you now, in the fullness of time, that if I’d had a second term, we would have completely phased it out, but the question is ‘What then?’” he said. “Upon years of reflection … we would then have had to do a genuine tax reform.”
In other words, wipe the personal property tax off the books. That would require broadening other revenue sources such as real estate or local option sales taxes and likely direct appropriations from the General Assembly.
That wouldn’t be cheap. According to the Auditor of Public Accounts’ 2024 “Comparative Report on Local Government Revenues and Expenditures,” the personal property tax generated $3.95 billion for localities during the 12 months that ended last June 30. That is the second largest local revenue source behind real estate taxes which generated $14.2 billion in local revenue in the same span.
If Earle-Sears and Spanberger are serious about their pledge, perhaps they should contact two primary stakeholders: the VML and the Virginia Association of Counties. Joe Flores, VML’s fiscal policy director, said Spanberger’s team recently reached out to his organization about the tax.
“…[R]eplacing a primary revenue source for counties, cities and towns, at a time when there remains uncertainty about the general fund revenue outlook and the federal government is on the verge of shoving costs onto state and local governments, is likely to prove exceedingly difficult,” Flores said.
“It is worrisome that these proposals have gained political momentum in the press with Virginia facing future reductions in Medicaid, SNAP, and other federal grants because of the federal reconciliation bills proposed in each house of Congress,” said Dean Lynch, VaCO’s executive director. “But we welcome future discussions with either candidate on the best ways to supplant local revenues with needed state funding.”
None of this is to discourage you, Winsome and Abigail, from your promise. But first, learn what such a massive political and policy feat requires. Think of it like putting a person on Mars — not something you can knock off in your garage over a weekend.
YOU MAKE OUR WORK POSSIBLE.
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Author: Bob Lewis
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