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Raising the state gas tax should be part of broader tax reform that could actually decrease what Iowans pay in taxes and fees, Gov. Terry Branstad said Friday.
“I think next year's the year to do it,” Branstad said on Iowa Public Television's “Iowa Press.”
Branstad has recognized the need for more revenue to meet state transportation needs, but told lawmakers and local government leaders 2012 was not the year because of high gas prices. However, in recent weeks, gas prices have fallen, he said.
Taxes are likely to be a legislative priority next year. Republicans already are proposing returning approximately $390 million to taxpayers. Democrats and the GOP say they will continue to pursue property tax reform.
There was some support among Democrats and Republicans for phasing in an increase to help cover a projected $215 million yearly shortage in money needed to address Iowa's critical transportation needs. A Senate subcommittee approved a 5-cent per gallon increase Jan. 1, 2013, and another nickel boost on Jan. 1, 2014.
Despite bipartisan efforts in both the House and Senate, supporters could not pull together the necessary votes to raise the tax for the first time since 1989.
Currently, Iowa charges 21 cents per gallon on sales of unleaded gasoline, 19 cents per gallon for ethanol-blended fuels and 22.5 cents a gallon for diesel.
A task force appointed by Branstad found $50 million in savings that have been redirected to road work. Much of it was one-time savings and will not provide an ongoing revenue stream. That panel also recommended a gas tax hike.
One source of opposition was auto dealers, who objected to raising the registration fees for hybrid vehicles, electric cars and vehicles that run on natural gas. Branstad suggested a fee based on the mileage might be the answer.
“If we do that in conjunction with comprehensive tax reform, you can actually show that people will pay less taxes,” Branstad told reporters later, “and the people that will pay more in user fees are the ones that are going to get the benefit of better roads and bridges.”
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