Missouri Senate approves fuel tax increase
March 19, 2021
The Missouri Legislature is one step closer to enacting the state’s first fuel tax increase in 25 years.
Missouri Department of Transportation officials have long advocated for a fuel tax increase. The agency says there is an $825 million gap in annual road and bridge funding.
To address the shortfall, the Missouri Senate has voted to advance a bill to raise the state’s 17-cent fuel tax rate. The rate was last increased in 1996.
Sponsored by Senate President Dave Schatz, R-Sullivan, SB262 would provide an additional $500 million per year.
The bulk of the new revenue would come from increasing the fuel tax rate by 12.5 cents to 29.5 cents per gallon.
The increase would be phased in over four years. Starting Oct. 1, the tax would be increased by 2.5 cents annually through 2025.
Additional revenue from the fuel tax increase is estimated to be $450 million annually.
A provision included in the bill would setup a rebate program for many Missouri residents. Specifically, drivers who keep receipts for fuel purchases for use in vehicles weighing less than 26,000 pounds could request a full refund annually of the additional taxes paid.
“The provision essentially eliminates the tax increase for owners of passenger vehicles if they would prefer not to pay the higher rate,” Schatz said in prepared remarks.
Owners of alternative fuel vehicles would also contribute. The fees for decals would be increased by 20% annually for five years.
Fees for electric and hybrid vehicles weighing in excess of 36,000 pounds would see a 10% annual increase over the same time period.
“From where I stand, SB262 represents an opportunity to ensure our state’s system of roads and bridges is safe and reliable for generations to come,” Schatz stated.
The bill has moved to the House for further consideration. LL