Proposal to cut Iowa's per-gallon fuel tax introduced

Bill would bump sales taxes on fuel wholesalers instead

DES MOINES — A proposal to cut the state’s per-gallon fuel tax but bump sales taxes on fuel wholesalers was introduced in the Statehouse this week.

House File 661 is the latest legislative attempt to raise money for the state’s infrastructure backlog, which the Iowa Department of Transportation pegs at $215 million a year.

An earlier bill that called for raising the fuel tax by 10 cents over three years still is tied up in committee.

“Right now, we’re working on the numbers with (the Legislative Services Agency),” said bill sponsor Rep. Josh Byrnes, R-Osage, who chairs the House Transportation Committee. “We’re trying to get in that $215 million-$220 million range.”

He said every 1 percent increase in the wholesale tax looks to bring in $47 million compared to the $22 million every 1-cent increase the per-gallon fuel tax brings in.

Byrnes said the legislation might garner support from critics who say they don’t want to see the state’s per-gallon fuel tax increased, even though the legislation would likely lead to higher prices at the pump if the cost gets passed on to motorists.

“I’m trying to find a method that people can feel better about, and if at the end of the day, they can say we decreased the fuel tax on the consumer and shifted the tax to the wholesaler, then maybe that’s something we can do,” he said. “The nice thing about this is it gets kind of into indexing so we don’t have to have this fuel tax debate every few years.”

Gov. Terry Branstad has, so far, not endorsed any particular method for raising money for the state’s roads and bridges. Asked about the Byrnes bill Wednesday, the governor said he didn’t want to endorse a specific plan.

“I recognize the legislative process is one that requires a lot of give-and-take and a lot of work with a lot of people,” he said. “I want to play a constructive role in working with people on this, but I know it’s a difficult and controversial issue.”

Still, some lawmakers are feeling pressure to get something done this year.

“However we address the issue, we need to address the issue,” Sen. Tod Bowman, D-Maquoketa, chairman of the Senate Transportation Committee, said. “There are a lot of ideas out there.”

He said the Byrnes bill “is worthy of a conversation,” but he wants more people included in that discussion than just those on the transportation committee.

“Hiding behind an election year isn’t useful,” he said. “Where’s the governor on this issue? What’s his idea to solve this problem?”

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