Clearing the Confusion on Cost to Consumers
As the impact of the state’s new Transportation Funding plan is discussed, many false statements and facts about the costs to motorists, as well as the bill itself are being perpetuated in news stories, editorials and columns.
Let's talk facts.
The New Bill Fully Eliminates Gas Tax on Motorists
House Bill 1060 TOTALLY ELIMINATES
the 12-cent Liquid Fuels Tax (otherwise known as the “Gas Tax”) on January 1, 2014. There will no longer be a direct or special tax on consumers for gas.
• The approximately $720 million annual “cost” from the gas tax elimination will be shifted to the Oil Company Franchise Tax in a millage adjustment.
• The Oil Company Franchise Tax is a tax on oil companies based on the wholesale price of gas.
Oil Companies Will Finally Pay Their Fair Share
House Bill 1060
TOTALLY shifts the gas tax burden to oil companies through the Oil Company Franchise Tax. Currently, the Oil Company Franchise Tax is based on the average price of gasoline back in 1983 (which was $1.24). So, oil companies have been paying their tax based on 1983 rates.
• House Bill 1060
removes the artificial cap (from 1983) to reflect current-day market prices (for today and into the future) – IT WILL NOT BE FULLY IMPLEMENTED UNTIL 2017
• The cap will increase 9 cents in the first year, beginning January 1, 2014.
• It will incrementally be increased through 2017, at which point the cap will be fully removed.
• The Oil Company Franchise Tax will be just part of the cost of doing fuel and energy business in the Commonwealth.
• This cost, as all other costs, will be built into the consumer price of gasoline.