Vermont gas tax increase now in effect, diesel tax boost effective Oct. 1

| 6/5/2009

Vermont Gov. Jim Douglas recently signed the $540 million transportation budget. There was little fanfare over the bill increasing the state’s fuel taxes about 3 cents per gallon.

Vermont isn’t alone in the pursuit of fuel taxes to help prop up transportation funds. Other states looking to charge consumers more at the pump include Maine, North Carolina and Oregon.

A 2 percent tax on wholesale gas prices took effect June 1 rather than the more usual July 1 start date. Declining transportation revenue was cited for moving up the effective date.

The wholesale increase equates to a 3.3-cent-per-gallon boost that brings the state’s tax rate on gas to 22.3 cents. The diesel tax is 26 cents per gallon.

The tax on gas will be figured quarterly at a per-gallon rate based on the average prices charged to distributors. That rate starts at 3.3 cents and will be adjusted July 1 for the first quarter of the new fiscal year.

A 3-cent-per-gallon diesel tax increase won’t take effect until Oct. 1. Combined with the higher gas tax rate, the fees will raise about $13 million in fiscal year 2010.

Despite his previous stated opposition to tax increases, Douglas signed the bill into law – a move that routes the new revenue to road and bridge work. Also included in the budget are higher license and registration fees.

While Vermont is planning to receive $125 million in federal stimulus money in the next two years, supporters said the extra money is needed to make up for years of decline in the state’s transportation fund.

To view other legislative activities of interest for Vermont in 2009, click here.

– By Keith Goble, state legislative editor

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