Alaska bill would double the state’s fuel tax rate

Alaska’s first fuel rate increase in more than a half century is one step closer to reality.

The state charges an excise tax of 8 cents per gallon on gas and diesel purchases. An additional 0.95-cent surcharge is added to the tax.

The House Transportation Committee has voted to advance a bill to double the 8-cent fuel tax to 16 cents. The 0.95-cent surcharge would also increase to 1.5 cents per gallon.

Rep. Andy Josephson, D-Anchorage, said in recent remarks the current tax rate is well below the inflation adjustment since 1970. He points out when adjusted the tax rate imposed 51 years ago should be set at 54 cents today.

“Alaska’s fuel tax has lost 85% of its purchasing power since it last changed,” Josephson stated.

The Alaska Department of Revenue estimated the fuel tax could have raised $30.5 million for fiscal year 2020.

The agency reports the fuel tax increase legislation would raise an additional $33 million annually for transportation work. Most of the revenue would be applied for highway maintenance.

The increased surcharge would raise another $3.5 million per year for oil spill prevention and cleanup.

The Alaska Trucking Association spoke in favor of the bill but expressed concern about the details. Joe Michel, executive director for the group, cited concern about making certain revenue is earmarked solely for highway maintenance.

Alternative fuel vehicles

A separate provision in the bill would increase in biennial registrations for electric vehicles from $100 to $200. Hybrid vehicle registrations would increase from $100 to $150.

Increased fees on alternative fuel vehicles initially would raise about $100,000 yearly.

HB104 awaits further consideration in the House Finance Committee. LL

More Land Line coverage of news from Alaska.