Virginia Tax to Raise Gas Prices by 5 Cents Jan. 1

Gasoline prices in Virginia could rise by 5 cents-per-gallon starting Thursday.

Despite the falling price of oil, drivers could end up paying more at the pump due to a tax increase on wholesale gas, which is intended to help fund the $6 billion transportation package passed under former Virginia Gov. Bob McDonnell in early 2013.

The state’s transportation funding package originally relied on the passage of the federal Marketplace Fairness Act, a bill that would allow Virginia to collect sales tax from out-of-state online merchants. The bill passed through the U.S. Senate but stalled in the House, where Rep. Robert W. Goodlatte, who represents the Shenandoah Valley in Virginia’s 6th District, said the legislation was too flawed.

“I warned state officials last year that this was a very complicated issue that has been a topic of debate for nearly 15 years and that they should not assume legislation would be enacted within their time frame,” Goodlatte said in a statement. “The General Assembly was shortsighted in passing a transportation package with funding dependent upon the assumption that fundamentally flawed federal legislation would be enacted.”

Current Virginia law mandates that citizens self-report their online purchases and pay taxes accordingly, though the National Conference of State Legislatures estimates that Virginia lost $422 million in 2012 by failing to collect sales taxes on remote sales, The Associated Press reports.