Missouri fuel tax increase signed into law

A new Missouri law is set to raise the state’s fuel tax for the first time in one quarter century. The matter, however, might not be settled.

Gov. Mike Parson this week put his signature on a bill, SB262, to raise the 17-cent fuel tax rate by 12.5 cents over five years.

Starting Oct. 1, 2021, the fuel tax is slated to increase 2.5 cents each fiscal year until July 1, 2025. At that time, the tax rate will be increased by 73% to 29.5 cents.

A taxpayers group is looking to thwart the implementation of the fuel tax increase.

Americans for Prosperity in Missouri recently filed a petition for referendum with the secretary of state’s office to give voters the final say on the fuel tax increase.

Jeremy Cady, Missouri director for Americans for Prosperity, wants the state to find another way to cover costs to improve transportation infrastructure.

To make that a reality, the group must collect 107,000 signatures within 90 days of the referendum language being approved by the secretary of state. If the requirement is met, the question would qualify for the November 2022 ballot.

Meeting the signature requirement would delay implementation of the fuel tax increase until the public vote.

Hancock Amendment

The referendum focuses on the legality of the legislative action. At issue is the Hancock Amendment to the Missouri Constitution.

The amendment mandates that any proposed tax rate increase above a certain amount must go before voters.

The fiscally conservative advocacy group says that, by phasing in the tax increase, SB262 is intended to circumvent the requirement for a public vote.

Bill advocates countered that the legislation ensures the Hancock Amendment requirement is met.

Show me the money

State officials report the state has from $8 billion to $10 billion in unfunded needs for the transportation system.

The additional fuel tax revenue from SB262 is estimated to raise $455 million annually.

AFP says now is not the right time to make taxpayers pay more money. The group cites the economic difficulties resulting from the pandemic.

Included in the new law is an option for most Missouri residents to apply for an exemption and refund. The option will be available to residents fueling vehicles with a gross vehicle weight not exceeding 26,000 pounds.

Alternative fuel vehicles

Owners of alternative fuel vehicles also will contribute more. The fees for decals will be increased by 20% annually for five years.

Fees for electric and hybrid vehicles weighing in excess of 36,000 pounds will see a 10% annual increase over the same time period. LL

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