House Gives OK To Gas Tax Restructuring

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By a three to one margin, the Vermont House has given its preliminary approval to a bill that makes a significant change in the way that the state taxes the sale of gasoline.

The bill moves away from the current per-gallon tax and towards a sales tax on the price of gas. Backers of the bill say it’s needed because gas sales have dropped dramatically over the past seven years. In fact, 40 million fewer gallons were sold in 2012 compared to 2005.

Because the gas tax is imposed on a per-gallon basis, this development has resulted in a $35 million shortfall in the Transportation Fund.

House Transportation Chairman Pat Brennan says that unless more revenue is raised, the state won’t be able to take advantage of all the federal matching funds that are available to help repair roads and bridges across the state.

"This downward trend in gasoline consumption is not going to stop, it’s going to increase," said Brennan. "This kind of puts us between a rock and a hard place in the fact that we need to generate money to reconstruct our transportation system."

The legislation has a three-step process. First, beginning in June, it imposes a 2 percent tax on the price of gas, which is basically an 8 cent increase. Brennan says making this change is the best way for the state to meet its transportation obligations.

"We are suffering declining revenues that will decimate our infrastructure going forward," Brennan said. "What H510 does is shift the gasoline tax primarily from a fixed cent per gallon and a percentage tax."

Under the second step in the process, the transition to a sales tax would continue. In the summer of 2014, the sales tax on gas would be increased from 2 to 4 percent while the per-gallon tax would be reduced by 6 cents.

In the third step, in the summer of 2015, the sales tax on gas would be linked to inflation. House Republican leader Don Turner strongly objected to this provision of the bill.

"Nobody stood here 3 years ago and put an automatic gas tax so we don’t have to vote on it today but that’s what we’re doing," said Turner. "We’re passing a provision in this bill that will allow future Legislature’s not to have to take this tough vote. I don’t think it’s right."

But Transportation Committee Chairman Brennan said the inflation adjuster was a good way to keep up with the growing cost of many projects.

"I think it’s courageous. I think it looks to the future," said Brennan. " I think it has foresight and I think it ensures that people won’t have to make some of these tough decisions in the near future." 

The legislation also authorizes $11 million dollars in new bonding for transportation projects. The bill will come up for final approval in the House on Thursday.

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