Alabama Legislature takes first step to higher fuel tax rates

By Keith Goble, Land Line state legislative editor | 9/15/2015

An Alabama bill would remove the state from the list of about a dozen states with fuel tax rates below 20 cents.

Alabama now charges 19 cents per gallon on diesel purchases and 18 cents on gas. The tax rates have remained unchanged for more than 20 years.

The House Transportation, Utilities and Infrastructure Committee voted to advance a bill that would increase the state’s tax rates by 5 cents per gallon to 24 and 23 cents, respectively. The changes would take effect Jan. 1, 2016.

An estimated $155.8 million would be raised annually to pay largely for road and bridge work across the state. Specifically, the Alabama Department of Transportation would collect $100.3 million and local governments would claim another $54.4 million. The state’s Department of Conservation and Natural Resources would get $826,000 while the state’s Law Enforcement Agency would receive $288,000.

In addition, the bill authorizes the fuel tax to be increased by 2 cents per gallon each March.

HB28 awaits further consideration on the House floor. If approved there, it would advance to the Senate before heading to the governor’s desk.

States to take action this year on fuel tax rates include Georgia, Idaho and Nebraska.

A 7-cent-per-gallon increase in Idaho took effect on July 1. The rate now is set at 32 cents.

Georgia’s new tax rates also took effect on July 1. The state abandoned collection of a two-part tax on fuel purchases in favor of a pure excise tax set at 26 cents per gallon for gas and 29 cents for diesel.

In Nebraska, the Legislature voted to override a veto of a bill to increase the state’s fuel tax rate by 6 cents per gallon over four years to 31.6 cents. The tax increases are set to begin on Jan. 1, 2016.

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

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