Missouri Senate Gives Initial Approval To Phased-In Fuel Tax Increase

By Rudi Keller, Missouri Independent

March 10, 2021

A bill to increase the state fuel tax — and rebate the extra cost to people who don’t want to pay it — won first-round approval Wednesday in the Missouri Senate.

Under the bill sponsored by Senate President Pro Tem Dave Schatz, the tax on gasoline and diesel fuel would increase by 2.5 cents per gallon each year from Oct. 1 through 2025. The Senate acted quickly on a revised version of the bill Wednesday morning after spending more than eight hours debating the bill on Tuesday.

The bill would also increase the funding available for state highway needs by doubling the fee charged for cars and trucks powered by electricity or fuels not subject to the per-gallon tax.

The current state fuel tax is 17.4 cents per gallon, one of the lowest in the country. When fully implemented, Missouri’s fuel tax would be higher than all but Illinois, Iowa and Nebraska among the eight adjoining states.

The refund provision allows anyone who has paid the tax, both individuals and companies, to seek a refund of the additional tax between July 1 and Sept. 30 each year. To back up the claim, the taxpayer will have to show detailed records of their fuel purchases.

The fiscal note estimates that the tax will raise about $51 million the first year and up to $103 million per year for each additional increment, with about $462 million annually when fully implemented, depending on refund claims. When fully implemented, about $55.5 million per year would go to counties and $69.4 million to cities, with the remainder going into the state road fund.

The bill would not require a statewide vote. Under the state constitution, lawmakers can increase revenue by about $105 million annually without triggering provisions requiring a public vote.

No tax increase put to a statewide vote has passed since April 1987, when the fuel tax was increased from 7 to 11 cents per gallon. Two recent attempts to increase road funding, a sales tax increase in 2014 and a fuel tax increase in 2018, were defeated at the polls.

The bill requires another vote in the Senate to send it to the House.

Even if Schatz, R-Sullivan, can get 18 votes for his bill, its future is uncertain in the lower chamber.

Prior to the session, House Speaker Rob Vescovo, R-Arnold, said any gas tax hike would be greeted skeptically in the House.

“I am not a fan of the gas tax,” he said at the time. “I do believe it is the state’s responsibility to get to take care of our roads and bridges, but the voters just turned down a gas tax increase two years ago.”

This story was originally published by Missouri Independent. For more stories from the Missouri Independent, visit Missouri Independent.