Kentucky Senate OKs permanent penny increase in fuel tax

| 3/8/2005

The Kentucky Senate voted unanimously Feb. 28 to make permanent a 1-cent increase in the fuel tax that was triggered automatically last summer when fuel prices skyrocketed.

The extra penny generates roughly $30 million a year, Lexington Herald-Leader reported.

The fuel tax change is part of lengthy revisions to Kentucky’s tax code originally proposed by Gov. Ernie Fletcher and modified slightly in the House and Senate. The bill has been sent back to the House for approval of changes.

Kentucky has a formula for determining the amount of the motor fuel tax and, because of the higher wholesale prices a year ago, increased by a penny to 14.4 cents per gallon for diesel and 17.4 cents for gasoline. If the price of fuel were to fall, the penny would come off the tax.

The House version left the penny increase in place through the end of the current budget period on June 30, 2006. Senators voted to make the increase permanent.