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Truth-in-Taxation for the Motor Fuel Tax

The Utah Taxpayers Association proposes that Utah convert from a flat cents-per-gallon fuel tax to a statewide certified fuel tax rate, similar to Utah’s certified property tax rate. Like Utah’s certified property tax rate, a certified fuel tax rate would adjust to guarantee prior year revenue.

 

Fuel Tax Proposal 1

 

Under a certified rate, prior year revenue is guaranteed, plus any “new growth.” New growth is defined as the percent increase over the previous year in vehicle miles traveled (VMT). Prior year revenue plus new growth is then divided by the prior year taxable gallons of fuel sold to calculate the certified cents-per-gallon rate. As fuel consumption decreases due to increased fuel efficiency and other factors, the certified rate will rise to preserve revenue.

Similar to Utah’s Truth-in-Taxation process for exceeding the certified property tax rate, the legislature could statutorily increase the certified fuel tax rate if revenue is needed beyond growth in the certified rate. This holds politicians accountable for tax increases above and beyond the certified rate.

The Taxpayers Association supports this proposal as an alternative to indexing, because revenue growth is tied to growth in system use. In addition, by introducing VMT into the calculation of the fuel tax, Utah can begin moving towards a complete user-based system.

Click HERE for the PDF version of our infographic.



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