Minneapolis-St. Paul residents may soon be responsible for a “wheelage tax” to pitch in for road and bridgework.
Counties looking for alternative methods to fund road and bridge projects are considering a $5-per-vehicle tax, known as a wheelage tax. The tax is expected to generate about $10 million annually in the metropolitan area, the St. Paul Pioneer Press reported.
Supporters say the tax is necessary to ease the burden on property taxes. The taxes have soared to help pay for roads and bridges.
The wheelage tax is an alternative source of revenue. It gives metro area counties the right to impose the tax and earmark the money for transportation.
Minnesota law states that for every dollar raised from the wheelage tax, property taxes must be lowered by the same amount.
The revenue generated by the wheelage tax would roughly be the equivalent of a 2-cent-per-gallon increase in the fuel tax, the Pioneer Press reported.
The wheelage tax requires homeowners with two vehicles to pay $10 per year along with annual licensing fees. The tax revenue would go to each county and added up. Overall county property taxes would be trimmed by that amount.
Homeowners would see a reduction in property taxes but not necessarily equal to the amount paid in the wheelage tax.
The tax would apply to all licensed vehicles registered in the metro area, including large trucks and buses.