Push to change state gas tax in Virginia

This is a rush transcript from "Your World," February 9, 2013. This copy may not be in its final form and may be updated.

ERIC BOLLING, GUEST HOST: Meanwhile, to Virginia and a battle over the governor's transportation plan there. It would eliminate the gas tax and replace it with a small hike in state sales tax.

To Republican Governor Bob McDonnell on where things stand right now.

Governor, can -- thank you for joining us, first of all.

GOV. BOB MCDONNELL, R - VA: Thank you, sir.

BOLLING: Can you outline this plan, sir? You want to raise the state sales tax, but you want to eliminate the gas tax. Give us the numbers.

MCDONNELL: Well, we do have a problem with infrastructure in America.

You heard the secretary's comments. And you're exactly right. Only 6 percent of that stimulus money was spent on infrastructure, and the rest of it was spent on things that didn't help us much. So what we're trying to do is, we do have a problem. And it's the gasoline tax on a state of decline because of inflation, alternative fuels and CAFE standards and so forth.

And so we have got the most congested area in America in Northern Virginia. It just came out again this week. So we're trying to build infrastructure. The gas tax is going to keep declining, and so what we're suggesting is let's get rid of it and replace it with a sales tax that grows with the economy.

BOLLING: Let's tell our viewers the numbers. The state gasoline, Virginia gas tax itself is 17.5 cents per gallon.


BOLLING: Nationwide, it's 18.4. That will stay. But you're saying eliminate the 17.5 cents-per-gallon state sales tax...


BOLLING: ... but add eight tenths of 1 percent -- so go from 5 percent to 5.8 percent on sales of everything. Is that right?

MCDONNELL: Well, that's right.

And what happens is that we will have the lowest gas prices in the country. My guess is everybody is going to want to buy gas in Virginia. And we replace it essentially on a revenue-neutral basis in the first year with that hike in the sales tax to 5.8 percent. And the sales grows because of economic growth and the gas tax goes down.

So, it is part of the solution, Eric. But we're also doing other things. We're using some general fund. We're doing a couple other things, a small increase in the registration fee. All together, it's about $800 million a year which will go a long way to fixing our infrastructure. And it's quality of life. It's family time. It's job creation. And it's something we need to do.

BOLLING: Governor, there are a lot us out here saying, but aren't we raising taxes? Aren't you in effect raising taxes by taking away one tax, but giving the people of Virginia another tax that over the course of time will probably cost them more money, no?

MCDONNELL: Well, I'm saying it's not. It's a revenue-neutral conversion.

Everybody knows the gas tax is a long-term decline, and isn't going to be sufficient, and replacing it on a revenue-neutral basis today with a different type of tax that grows not because it's a tax increase, I believe, but because it's economic growth.

We know that's going to grow at 4 percent or 5 percent a year. So I think it's the right change. A lot of us governors around the country are looking at tax reform, tax changes to update us to the modern economy. But we're using a huge chunk, Eric, of general fund, which means we are cutting spending in other areas to free up money for the priority of transportation, and I think that's a conservative approach.

BOLLING: All right.

Governor, let's turn the page a little bit here. You delivered a State of the Union response at one point.


BOLLING: Senator Marco Rubio will be delivering the next one. He will deliver it in both in Spanish and English. What do you think? Give us some thoughts on that new turn of events.

MCDONNELL: Well, Marco is a great choice. He's one of most refreshing, dynamic, positive conservative speakers in the country today.

I would say a couple things. One is, you're never going to compete with the President of the United States that speaks for an hour and 10 minutes, when you have got 10 minutes to give the response. He's speaking to the well of the House and you're speaking looking at the camera.

So don't speak -- don't swing for the fences. Try to be yourself and do a couple things. One, make sure you're a happy, positive conservative because you want to attract people to your team. Two, spell out in real simple terms why our idea are better, why conservatism works and liberalism fails, and explain to people why these ideas will translate into results that will make the quality of life better for all Americans.

I think if he can do that in 10 minutes, especially with the middle class, it will be a good night.

BOLLING: Sir, someone said it. I can't remember who said it, but they said, oh, Marco Rubio, he speaks conservatism as a first language.


MCDONNELL: Well, that's what you have got to do.

Our ideas work. Theirs don't. And I think it's obvious when you're $16 trillion in debt and you have got unemployment rate near 8 percent. This president's ideas haven't worked. And the Republican ideas that Marco Rubio trumpets better than about anybody I think do work. And he can explain it well, connecting with the average voter. And it's a good choice with him.

BOLLING: All right, Governor Bob McDonnell, thank you for joining us, sir. Have a great weekend.

MCDONNELL: OK. Thanks, Eric.

Content and Programming Copyright 2013 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2013 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.