A new bill in the Vermont General Assembly would raise the state’s fuel tax by a nickel to help electric vehicle and other alternative-fuel vehicle owners.
Vermont now collects a 12-cent excise rate on gas purchases and a 28-cent rate on diesel. Additional taxes and fees on both fuels amount to 31.19 cents and 32 cents, respectively.
Sponsored by Rep. Martin LaLonde, D-South Burlington, H277 would raise the state’s fuel tax rates by 5 cents per gallon.
The new revenue would be used to aid electric vehicle infrastructure. Additionally, funds would be used to help “low income” residents purchase new and used electric, hybrid, and plug-in hybrid vehicles.
Advocates for a fuel tax increase say new revenue from fuel taxes is necessary to address road repair needs.
Critics question raising tax rates to assist purchases of vehicles that would continue to erode revenues from fuel taxes to pay for road work.
The bill awaits assignment to committee.
The Owner-Operator Independent Drivers Association believes increasing the fuel tax is the most equitable way to generate additional revenue.
“OOIDA and our members aren’t generally opposed to reasonable fuel tax increases,” said OOIDA Manager of Government Affairs Mike Matousek. “It’s the most equitable way to collect revenue to support our nation's roads and bridges.”
He added that “it is also much better than alternatives, such as tolling and VMT taxes.
“However, revenue generated from fuel taxes must be spent on the construction and maintenance of roads and bridges, and not diverted to non-transportation projects. If a legislative proposal doesn’t meet this standard, there’s simply no way we’ll support it. In fact, we’ll aggressively oppose it.”
Fuel tax boost for local work
A separate effort pursues a fuel tax increase to pay for municipal road improvements.
Local officials from around the state met recently at the capitol to call on legislators to support a 4-cent fuel tax increase to help fix local roads. The proposed tax increase is estimated to raise $10 million annually for municipal roads.
Some opponents say that municipalities must do a better job funding their own roadway repairs.
Supporters for a shot in the arm to cover expenses for local work say that property tax rates cannot keep up to cover road funding needs. They say state assistance is necessary.
In an effort to help cover costs for municipal roads, Gov. Phil Scott’s budget proposal for the next fiscal year would allocate $63 million for local work.
The Republican governor said he is opposed to raising fuel taxes. He cites concern about increasing Vermont’s price disparity with neighboring states.
Massachusetts collects a 24-cent-per-gallon tax on fuel purchases and New Hampshire charges 23.825 cents. In New York, the gas rate is 25.75 cents and diesel is 23.95 cents.
Rep. Kari Dolan, D-Waitsfield, has indicated that she plans to introduce the 4-cent fuel tax increase legislation.
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