Flagged Bill: HB 240 – Motor and Special Fuel Tax Increase Amendments, Rep. Nielson

Representative Jim Nielson (R – Bountiful)

The gas tax in Utah has existed since 1923 and has increased in fits and spurts for the last 80 years as lawmakers adjust the rate to reflect inflation over time, and revenues have gone toward the construction and maintenance of roads in the state. Many on both sides of the aisle accept the gas tax because it is known as a “user tax,” meaning that those who pay the tax directly benefit from that tax – after all, if someone doesn’t buy gasoline, odds are that same individual is not using the roadways.

For that reason, we shouldn’t be surprised to see a conservative lawmaker such as Jim Nielson (Republican – Bountiful) propose HB 240 – Motor and Special Fuel Tax Increase Amendments.

Utah has not seen an increase in the fuel tax for 16 years, when the tax rate was pegged at 24.5 cents per gallon. Of course, since then, inflation has taken its toll and the 24.5 cents does not go nearly as far as it used to. If the tax rate were adjusted with inflation, our 2013 tax rate should be closer to 36 cents per gallon – Utah motorists have received quite a subsidy over the years thanks to the legislature choosing not to up the tax with any regularity.

The desire to end this subsidy has been increasing over the years, and lawmakers have been saying that now is the time to up the tax that motorists should have been paying all along, so that the state can better fund transportation projects across the state.

HB 240 proposes a phased-in approach so that motorists won’t have a huge shock at the pump. If passed, the gas tax would be increased to 26 cents per gallon starting in July of this year, increase a cent and a half every year until 2017, and be set to the ultimate rate of 32 cents per gallon in July of 2018. This rate is still lower than what is required to match the adjusted 36 cents per gallon rate, and, assuming a 2 percent interest rate every year, the 39.5 cents per gallon needed to match 1998 level funding in 2018.

But, Nielson is attempting to make a change that would benefit the citizens of Utah. Currently, the Utah Department of Transportation (UDOT) estimates that it will have a $26 billion budgetary shortfall over the next thirty years. With Utah using an estimated 1.4 billion gallons of gasoline a year, it is expected that this tax increase could generate an additional $105 million in funds annually – reducing UDOT’s budget shortfall by $3.15 billion over thirty years.

Representative Nielson is quite possibly the best lawmaker to propose a tax increase, as he recently announced that he would not be seeking reelection in 2014. This, combined with the fact that there has been a general call to up the gas tax, means that this bill will likely pass and that gas prices will go up July 1 of this year.

To contact Representative Nielson, click here or call 801-550-3474.

Impact on Average Utahn:

High Impact   5 . 4 . 3 . 2 . 1 . 0   No Impact

Need for Legislation:

Necessary   5 . 4 . 3 . 2 . 1 . 0   Unnecessary

Lemon Score:

Sound Legislation 5 . 4 . 3 . 2 . 1 . 0 Clunker

You can track this, and all of our other flagged bills, by clicking here. Need an explanation of scores? Click Here.

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