States Seek to Change Motor Fuel Taxes to Increase Transportation Revenues

April 22, 2013

The number of states seeking to generate transportation revenues by adjusting their state motor fuel taxes continues to grow, with lawmakers in Minnesota, Vermont and Pennsylvania marking the latest to introduce such legislation.

In Vermont, the Senate has proposed decreasing the tax per gallon of gasoline by 7.5 cents, from 19 to 11.5 cents beginning May 1 and adding a 4 percent assessment on the retail sales price of gasoline. The House proposed phasing in the sales tax, with 2 percent effective May 1 and another 2 percent on July 1, 2014. When the second increase in the sales tax takes effect, the House proposed decreasing the tax per gallon by 5.9 cents. The administration had proposed a 4.7 cent decrease in the tax per gallon and a 4 percent sales tax beginning July 1.

After backing off a proposed gas tax increase in the face of opposition from Gov. Mark Dayton, Minnesota  state Senate Democrats proposed an alternative in the form of a new sales tax on fuel sales at the wholesale level. The revised proposal from Sen. Scott Dibble would cut the state's 28.5-cents-a-gallon gas tax by 6 cents a gallon. But it would replace it with a 5.5-percent tax that oil companies would pay at the wholesale level.

A bill introduced in the Pennsylvania Senate would uncap the oil company franchise tax is applied to the first $1.25 per gallon of the average wholesale price of gas, estimated this year at $3.11 per gallon by the state Department of Revenue. At those rates, the tax generates 19.2 cents per gallon for the state. Taxing the full wholesale price reportedly would generate 47.7 cents per gallon by the third year of the Senate plan, a 28.5-cent per gallon increase.

Other states seeking changes to the motor fuel taxes include Missouri, Washington, New Hampshire, and Michigan. Wyoming and Maryland recently passed legislation increasing their gas taxes.  

 

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This article originally ran in NATSO News Weekly (NNW), NATSO's member only weekly electronic newsletter. NNW is packed with the latest updates on government and business issues affecting the truckstop and travel plaza industry.

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