Alaska's largest city approves 10-cent local fuel tax

By Keith Goble, Land Line state legislative editor | 11/16/2017

The city of Anchorage, Alaska, will begin collecting a local fuel tax in the spring. The state’s trucking industry spoke out against the tax.

The Anchorage Assembly voted 10-1 to approve collection of a 10-cent fuel excise tax at fuel stations in the state’s largest city. Consumers will begin paying the new tax on March 1.

Collection of the local tax on gas and diesel will be in addition to the state tax rate of 8.95 cents per gallon.

The Anchorage tax is estimated to raise about $11.7 million in the first year. In 2019, revenue is estimated to reach $14.1 million.

Advocates said the local fuel tax will not increase overall taxes for residents. They point out that money collected will be used to provide property tax relief to all types of property tax payers.

Critics, including the Alaska Trucking Association, worry that the local tax in Anchorage could be a signal for other locales to pursue similar setups.

“Motor fuel taxes should be imposed at the statewide level so that all users of the highway and road facilities pay the same rate as a user fee,” ATA Executive Director Aves Thompson testified during recent discussion on the tax. “Our fear is that if the Anchorage Assembly adopts this ordinance additional communities will impose similar local taxes creating a stove-pipe taxation system throughout the state.”

He added that the motor fuel tax will not do anything to improve infrastructure.

“A motor fuel tax is a user fee. User fees are designed to pay for maintaining and improving what service or facility the user uses. This 10-cent increase will do nothing to improve the quality of our roads or bridges as all of the new revenue will be used to provide direct and proportional tax relief to all property tax payers.”

The city Assembly’s passage of the local fuel tax includes a provision that allows the tax rate to be adjusted for inflation.

Thompson added that, although the increased fuel costs are intended to be a wash for property tax payers, it is not the case. He told the Assembly that truck operations would be forced to increase costs to consumers to help offset higher fuel costs.



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