Jan.9,1998
                                                    Contact:  Bob Brickhouse
                                                              (804) 924-6856

REDUCING CAR TAX WILL HELP VIRGINIANS CONTINUE TO ENJOY ONE OF THE
NATION'S LOWER TAX BURDENS BUT COULD STRAIN SOME GOVERNMENT PROGRAMS
 
	If Virginia moves ahead with plans to reduce or eliminate the
personal property tax on motor vehicles without any new taxes to
replace the revenue, as now seems likely, its citizens will continue
to enjoy one of the lighter overall tax burdens in the country,
according to a University of Virginia economist.
	Gov.-elect James Gilmore's proposals to do away with the car
tax for most owners, if enacted by the 1998 General Assembly, will
further Virginia's downward trend in the tax burden borne by its
residents, said John L. Knapp, director of business and economic
research at U.Va.'s Weldon Cooper Center for Public Service.
	In a study of tax burden in the current issue of the
University of Virginia News Letter, Knapp writes that the state ranks
47th in the country in total state and local taxes its residents pay
per $1,000 of income. The total taxes Virginians pay per $1,000 of
their income is 86.5 percent of the U.S. average, although Virginia is
a relatively high income state, Knapp said.
	By contrast, neighboring Maryland and North Carolina's total
taxes are respectively 96.9 and 98.2 percent of the national average. 
	On a strictly per capita basis, without using income as a
rough indicator for taxable resources, Virginia still ranks in the
bottom half of states, at 31st in tax burden, Knapp said. 
Tax burden, as measured by the ratio of state and local taxes to
personal income, has dropped in each year since in 1989 in Virginia,
and the burden for 1996 appears to have been the lowest experienced in
a decade. 
	"If the tax on motor vehicles is greatly reduced or eliminated
without revenue replacement, as it now appears likely, the state will
continue a downward trend in tax burden," Knapp said. "This will put
new pressure on state and local governments to examine priorities and
to become more efficient. It may also strain many government programs
intended to help the needy."
	"A lower tax burden could stimulate economic growth or it
could have the opposite effect if state and local governments become
so revenue-strapped that they must curtail spending on education and
infrastructure that support economic growth," Knapp said. 
	In fiscal year 1994, the most recent year for which data are
available, Virginia made a below-average effort for all major tax
sources except the individual income tax and motor fuels taxes. Since
then, a number of states have increased gasoline taxes, so only the
individual income tax is high. Compared to many states, Virginia's
general sales tax and corporate income tax are particularly low, Knapp
said.
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	For additional information John Knapp may be reached at (804)
982-5604 or knapp@virginia.edu Television reporters should contact our
TV News Office at (804) 924-7550.