Bill proposes tax increase on gas, vehicle registration
BOISE — Increased prices on fuel and vehicle registration, and new fees on electric and hybrid cars are all components of a bill Rep. Joe Palmer, R-Meridian introduced Monday that he said would be a “complete overhaul” of the way transportation is funded in Idaho.
Palmer’s proposal seeks to raise $200 million a year after a three-year phase-in period to fund upkeep projects to improve Idaho’s ailing transportation infrastructure. The Idaho Transportation Department has deemed nearly 700 state and local bridges as “structurally deficient,” and another 25 percent are expected to hit that status in the next five years.
Although those are some of the key reasons behind the bill, Palmer is doubtful the proposed legislation would remain intact in its current form.
“There should be a disclaimer as it moves forward, I don’t think any of us here have any illusions that it’s going to be the same if it does come back with a bill number on it,” Palmer said. “As we get this into the public, we would be able to see what we’re dealing with and the types of things we can do to fund transportation.”
Rep. Jason Monks, R-Meridian, moved to introduce the bill before the House Transportation and Defense Committee, which was unanimously approved.
“Normally, I would advocate for not printing bad pieces of legislation, but I understand the purpose of this is to get these ideas out there so that we can actually discuss these,” Monks said.
Idaho’s taxes on fuel have not been adjusted since 1996, and the new legislation would add 8 cents to every gallon of gasoline, and 12 cents to every gallon of diesel pumped after the bill is signed into law. This initial increase is expected to raise over $68 million the first year.
After the first year, both will continue to increase by 1 cent per gallon each year, until the Legislature passes a bill to end the increase, or Gov. C.L. “Butch” Otter imposes an executive order ending the increase. After the third year, the fuel hikes are expected to raise $100 million per year.
A 3 cent transfer fee would be placed on licensed fuel distributors who first receive the fuel in Idaho, and Palmer estimates the tax would raise about $34 million a year after the phase-in period. Rep. Patrick McDonald, R-Boise said he had “serious issues” about this part of the legislation, and said the transfer fee would be passed onto the consumer.
The legislation calls for a 50 percent increase in the costs to register passenger cars and trucks, a 25 percent increase on commercial truck registration and a 50 percent increase on trip and over legal permits. Palmer justified the proposal by stating Idaho has some of the lowest registration fees in the U.S.
Palmer said hybrid cars and electric cars would dodge much of the fuel price hikes comparatively, so he proposed electric cars would have to pay a registration fee of $140 every year and hybrid cars would face a $75 registration fee each year. He calculated the raise amount to about $640,000 a year following the phase-in period.
Palmer also suggested about $23 million a year from sales tax revenue to be shifted from the general fund to the transportation department. Additionally, Palmer included a sales tax exemption on materials used in the construction of roads, estimated to contribute almost $22 million a year after three years.
“I would find it pretty hard to believe that … I could take this bill and pass it with all these numbers the way they are,” Palmer said. “I anticipate (other) legislation coming out as soon as I sit in my seat, from the next people that get up, there is definitely other pieces of legislation moving forward.”
George Wood Jr. can be reached at[email protected]