A four cent hike in the state’s diesel tax is under discussion in the Senate Transportation Committee, leading representatives for truckers and bus drivers statewide to plea for “moderation” in any such increase.
A four cent per gallon increase on the state’s 29 cents per gallon tax, which accompanies a 24.4 cents per gallon federal tax, would raise $2.4 million. According to lobbyists for the fuel industry, Vermont’s diesel tax burden is about 16th highest in the nation.
Roland Bellavance, who leads the Vermont Truck and Bus Association, said a four cent increase could add $10,000 to $20,000 in taxes per year to his weekly $200,000 fuel expenses, for his trucking firm Bellavance Trucking, which racks up more than 10 million miles per year.
Figures like that led Ed Miller, a lobbyist for the association, to ask lawmakers for a lesser hike, or “a small a tax as possible.” Even though the tax would be phased in over two years, he said the eventual four cent hike amounts to a 14 percent increase on existing diesel taxes.
“To cut to the chase, I would ask the committee to try to keep the extent of the increase just as low as you can,” said Miller. “I think our members were prepared for a cent, or maybe two cents. … If the second biggest expenditure of a company is fuel, you pay more attention to what your level of taxation is, than you or I might when fueling a car every week or every two weeks.”
But Miller also said that the Senate and House transportation committees had treated the trucking industry fairly in the past few years. He added: “We all understand that we need infrastructure repair, and we’re not in any sort of denial.”
This year, the state must raise about $36.5 million so as not to lose out on about $56 million in federal transportation funds. The House approved a major gasoline tax increase last month despite strong Republican objections.
Part of the reason for raising the diesel tax, explained Senate Transportation member Sen. Richard Westman, R-Lamoille, is to balance the tax burden broadly and fairly among all users of the state’s transportation infrastructure. He noted that trucks, as heavier vehicles, do more damage to Vermont’s roads than most cars.
“You have to figure out a way to apportion this evenly amongst all the users,” said Westman, a former chair of the House Transportation Committee. “You can’t pick out one group. … Everybody has to feel the pain of this increase, to be able to make it fair.”
But Matt Cota, executive director of the Vermont Fuel Dealers Association, argued that the tax hike would impact heating oil trucks disproportionately.
He estimated that a four cent hike would add $100 annually in diesel taxes for each heating oil truck. Legislation in the state’s fee bill raises meter inspection fees on these trucks by $100. The two increases would have heating oil dealers paying the state $300,000 more in taxes and fees collectively than they did last year, said Cota.
Brian Searles, the state’s Transportation secretary, declined to comment on a potential diesel tax hike, saying policy discussions weren’t yet finalized. A diesel tax hike was not mentioned in the administration’s original transportation proposal, presented in January.
The legislation under discussion also mandates a study on how to best tax vehicles powered by electricity and natural gas, to be done by Dec. 15.
The Senate Transportation Committee is scheduled to work on the bill, which details state government’s overall vision for transportation in Vermont, throughout this week.