Thursday, May 5, 2011

Possible New Gasoline Tax?

Although not yet law, nor introduced as a bill before Congress, the draft of a bill by the Obama administration is raising eyebrows due to it proposing a new gas tax based on the amount of mileage driven.

The proposal states that a new Federal office, namely the Surface Transportation Revenue Alternatives Office, be established within the existing Federal Highway Administration. The new office would be charged with studying how a mileage-based user fee (i.e. tax) system could be established, including the technical aspects of how to track the mileage of all motor vehicles driven in the United States.

A total of $295 million would be allocated to the office over five years.

The draft bill follows a report by the Congressional Budget Office issued in March which suggested tracking, reporting and taxing total vehicle miles traveled (VMT). Whether such a tax would be in addition to, or in lieu of, existing Federal gasoline taxes is not mentioned in either the report or the draft bill.

Presently, there is a Federal tax of 18.4 cents on each gallon of gasoline sold. In California, there is an additional tax of eighteen cents per gallon plus a 6% state sales tax, 1.25% county sales tax, any additional sales taxes levied locally and a 1.2 cents per gallon state UST (underground storage tank) fee.

A spokesperson for the Obama administration has stated the proposed bill is in draft form, and has been neither approved nor reviewed by the administration.

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