Vermont bill would boost state's fuel taxes

| 3/1/2006

A Vermont House panel has endorsed increasing the state’s per gallon taxes on gasoline and diesel by 6 cents. That would mean a 24 percent increase in the per-gallon tax on diesel.

The measure isn’t expected to become law, however, because the governor has said he is opposed to increasing taxes for any reason this year.

The House Transportation Committee voted 7-4 Feb. 23 to boost the tax for diesel from 25 cents per gallon to 31 cents and the tax on gasoline from 19 cents per gallon to 25 cents. The bill – H869 – has been forwarded to the House Ways and Means Committee for further consideration.

The two tax increases would generate $26.5 million a year, the Burlington Free Press reported. The amount is $2 million more than what would be needed to cover shortfalls in Vermont’s current tax stream that pays for road and bridge work and meet federal guidelines for the state to claim additional transportation funds.

Revenue from nearly 8 cents of the fuel taxes would be allocated for local projects.

Lawmakers from both sides of the isle have promised to find money so the state could tap the estimated $66 million a year in federal money that U.S. Sen. Jim Jeffords earmarked for Vermont during the next five years. Democrats and Republicans in the state have disagreed on how to come up with the money.

Gov. James Douglas has rejected talk about increasing taxes for any purpose this year, the Free Press reported.

Instead, he wants to increase funding for transportation in the state by boosting motor vehicle fees and possibly dipping into the state’s education fund. The two steps would raise $24 million.

Increased fees at the Department of Motor Vehicles would generate $10 million. The remaining $14 million would come from shifting a portion of the motor vehicle purchase- and-use tax from the education fund and into transportation.