Nebraska bill would add wholesale fuel tax

| 1/25/2008

A new tax could be added to wholesale fuel purchases in Nebraska if a state lawmaker gets her way.

The state is facing a projected $14 million shortfall in federal highway funds this year. As a result, senators in the state are looking at alternative sources of revenue to reduce the funding gap.

Sen. Deb Fischer of Valentine, chairwoman of the Legislature’s Transportation Committee, has introduced a bill that would add Nebraska to the list of nine other states that apply a general sales tax on motor fuels.

Fischer’s bill would establish a tax of 5 percent per gallon on the price of motor fuels at the wholesale level – allowing the tax to increase with the price of fuel. The majority of revenues would be routed to the state’s Highway Trust Fund with one-third of the revenues earmarked for cities and counties.

The state’s 10-cent-per-gallon tax, which is a fixed tax, would be reduced by 8 cents per gallon to 2 cents per gallon.

Supporters say the current fuel excise tax is expected to remain flat while construction costs continue to escalate. They say the bill would generate revenue to help the Nebraska Department of Roads cover the costs for new highway projects and maintenance.

Others say the changes won’t necessarily result in higher prices at the pump because the tax would be collected when fuel is sold to retail stations.

The bill – LB846 – is in the Legislature’s Revenue Committee where it likely will have difficulty advancing from the panel. Gov. Dave Heineman said he is opposed to a new tax on fuel.

To view other legislative activities of interest for Nebraska, click here.

– By Keith Goble, state legislative editor