Fuel tax changes highlight new laws for 2017

By Keith Goble, Land Line state legislative editor

As the calendar flips to the New Year there are states across the country with notable increases in their fuel tax rates.

New Jersey is among the states where the diesel tax is slated to more than double on Jan. 1. As part of a $2 billion-per-year increase to transportation funding approved by state lawmakers this fall, the state’s gas and diesel rates were nearly tripled.

The gas rate was increased from 14.5 cents to 37.5 cents on Nov. 1. Increasing the diesel rate was delayed until the first of the year. At that time the tax rate will be raised from 17.5 cents to about 36.5 cents.

An additional 8-cent increase in the diesel rate will be imposed on July 1, 2017, to reach a total of 44.5 cents.

Gail Toth, executive director of the New Jersey Motor Truck Association, has said her organization has been supportive of fuel tax increases. But she went on to blast the drastic increase the deal resulted in.

She says advocates for upcoming diesel tax increase are either fooling themselves or do not care how it will affect trucking operations.

"Their mindset is ‘you’re going to pass it on anyway,’" Toth previously told Land Line. "So, as a result, everyone is going to pay more for everything – milk, groceries ... everything. Politicians don’t want to emphasize that fact."

Across the state line in Pennsylvania a dime increase is looming.

The state now collects 51.4 cents on each gallon of gas sold in the commonwealth. The diesel rate is set at

65.1 cents. Each tax is the highest in the nation.

On Jan. 1, an increase of as much as 10 cents is anticipated. The rate hikes are set by a 2013 state law that removed the state’s flat tax on fuel and instead uncapped the state’s oil company franchise tax – the tax on wholesale fuel purchases.

Michigan’s fuel tax rates are on the way up as part of a 2015 multi-bill deal to eventually raise $1.2 billion annually for transportation.

Starting Jan. 1, the state’s 19-cent-per-gallon gas tax rate is expected to increase by 7.3 cents to 26.3 cents. The 15-cent diesel rate is also set to increase to 26.3 cents.

Each year thereafter the fuel tax will increase by 5 percent or by the inflation rate, whichever is less.

The state of Nebraska will implement another round of fuel tax increases the first of the year. The change marks the second of a four-step increase over four years. The state’s 26.7-cent-per-gallon gas tax and 26.1-cent diesel tax will increase by 1.5 cents. Additional 1.5-cent increases will kick in each year through January 2019.

A North Carolina law in effect Jan. 1 implements a new fuel tax formula. The state’s 34-cent flat rate will be multiplied by a percentage based on increases in state population and a consumer energy price index.

The tax rate will be adjusted annually and is expected to reach about 36 cents per gallon in 2019.

Meanwhile, Iowa is instituting a slight price break at the pump. On Dec. 31, a penny will be lopped off the state’s fuel tax rates.

The change results from the repeal of a program in place since 1989 that collects 1 cent per gallon on fuel purchases to fund the repair of underground fuel storage tanks.

The new diesel rate will be set at 31.5 cents and the gas rate will become 29.7 cents.