Motor fuel tax would triple under bill, but remain below national average

If enacted, Alaska’s motor fuel tax would triple, but remain less than half of its inflation-adjusted high. (Screen capture of Institute of Taxation and Economic Policy report).

Lawmakers are considering tripling the state’s motor fuels tax over the next two years. A bill would raise the tax from a national low of 8 cents per gallon to 16 cents in July, then 24 cents per gallon in July 2018.

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The money raised by House Bill 60 would be designated to maintain the state’s roads, as well as airports and ferries.

Transportation Commissioner Marc Luiken told the House Transportation Committee on Jan. 31 the state would spend the money carefully.

“My commitment to you is, is that … we will be accountable to Alaskans, to you as our investors, for these funds that you’re investing in this department,” Luiken said.

While the Legislature opposed all tax increases last year, some powerful lawmakers have signaled an openness to considering raising the motor-fuel tax for the first time since 1970. They include Senate President Pete Kelly, a Fairbanks Republican.

“I don’t mind having the lowest in the nation, but certainly we need to update it from time to time,” Kelly said. He who described the tax as a “user fee.”

Adjusted for inflation, the 8-cent-per-gallon tax in 1970 would equal 50 cents today. If the tax is raised to 24 cents, it would still remain below the national average.

Some lawmakers who represent Matanuska-Susitna Borough residents expressed concern that the tax would be a burden on those with long commutes.

Wasilla Rep. Colleen Sullivan-Leonard, a Republican, was among those expressing concern about the tax.

“Who’s going to be affected? And it’s going to be my residents and it will be significant,” Sullivan-Leonard said. “Every penny, I think, is very detrimental.”

Anchorage Rep. Matt Claman, a Democrat, noted that the people who benefit the most from using the roads would pay the tax.

“Even though those that buy more fuel and (are) driving on the roads are actually using the roads more, they’re getting the very much benefit of what they’re spending,” he said. “Because they’re getting roads that get maintained.”

Representatives of airlines and other businesses that use fuel are scheduled to testify regarding the bill in the House Transportation Committee on Thursday.