Utah lawmakers consider doubling state’s fuel tax

| 7/30/2007

Higher fuel taxes could be on the horizon in Utah. Two state legislative panels recently took some time out of their summer break to get together and discuss possible solutions to the state’s road funding woes.

The interim transportation and revenue and taxation committees heard presentations this month on options to help the state generate billions of dollars to build, repair and expand highways to help relieve traffic congestion. Projects highlighted include the widening of Interstate 15 in Utah County and building the Mountain View Corridor in Utah and Salt Lake counties.

A non-profit, bipartisan group of 2,500 businesses and individuals – the Utah Taxpayers Association – told lawmakers part of the solution to pump life into the state’s struggling transportation system could be to double the state’s 24-cent-per-gallon tax charged on gasoline and diesel. To offset the hike, they said the state’s personal income tax should be reduced accordingly, the Deseret News reported.

Another option would be to remove the sales tax exemption on fuel purchases. That would amount to an additional 4.75 percent tax tacked onto pump purchases.

Supporters contend that applying a sales tax to purchases of fuel would provide the state with a more consistent source of revenue for roads. The fuel tax doesn’t increase with inflation. As a result, it doesn’t provide enough revenue to sustain growth, they say.

Opponents counter that fuel prices are very volatile. They would prefer a tax system that relies on stable revenue sources.

One other option presented to lawmakers was to implement congestion pricing in high-traffic areas. These and other options to help pay for road work can be considered once the Legislature opens its 2008 session in January.

To view other legislative activities of interest for Utah in 2007, click here.

– By Keith Goble, state legislative editor