Utah House panel endorses fuel tax increase

By Keith Goble, Land Line state legislative editor | 2/18/2015

Truckers and other drivers using Utah roads could soon be responsible for paying more tax on fuels to help the state raise about $130 million annually for roads, bridges and transit.

The state now charges an excise tax rate of 24.5 cents per gallon on gas and diesel purchases. The tax rate hasn’t changed since 1997.

The Senate Transportation and Public Utilities and Technology Committee voted unanimously to advance a bill that would help the state address a projected $11.3 billion gap in transportation funding during the next 25 years.

Specifically, the bill would raise the gas tax rate by 10 cents and the diesel rate by 5 cents. If approved by state lawmakers, motorists and truckers would soon be responsible for paying 34.5 cents and 29.5 cents, respectively.

In addition, a 29-cent-per-gallon rate would be applied to natural gas purchases – up from 8.5 cents.

According to a fiscal note attached to the bill, the tax increases would amount to an additional $128.8 million in the first year.

Sen. Kevin Van Tassell pointed out to committee members that the tax rate has remained unchanged for 18 years. In the meantime, the loss of buying power to inflation over that time period requires a 10-cent-per-gallon increase to get where the state needs to be to move forward maintaining roads and bridges.

The bill, SB160, awaits further consideration on the Senate floor. If approved there, it would advance to the House.

On the House side, state lawmakers are working on an alternative plan that is expected to include a component that would turn the excise rate into a sales tax that adjusts annually.

Rep. Jim Nielson, R-Bountiful, has said that the state would not be having this conversation if the fuel tax rate was linked to inflation. Instead, he pointed out the tax has lost purchasing power since the last time the Legislature took action on the rate.

However, he said during an interim meeting to address transportation funding that it’s not a dead tax, yet.

Gov. Gary Herbert said he supports the pursuit at the statehouse to raise revenue for transportation work through a fuel tax increase. The Republican governor said he also recognizes “there is more than one way to skin a cat.”

“The House is more inclined to look at some kind of sales tax, or some kind of indexing. Both ideas are viable,” Herbert said during his weekly press conference. “Maybe there’s a combination of both that will have to come to pass to get it through both bodies. Clearly we need to have an adjustment in how we fund transportation, and I think this is the time to do it.”

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