It’s up to the Senate in the final days of the legislative session whether Alaskans will get a year of gasoline and diesel at the pump without the state tax of eight cents a gallon.
The House by a 36-2 margin on May 4 passed the measure — which could save an average driver $30 to $50 a year in motor fuel taxes but cost the state about $35 million in lost revenues — sending it to the Senate for action in the final two weeks of the session.
A week later, the Senate Transportation Committee moved the bill on May 11, sending it to its next stop, the Senate Finance Committee, just one week before the constitutional adjournment deadline this Wednesday.
As of Monday, the Finance Committee had not scheduled the bill for a hearing. If the Senate fails to approve the bill, which also would need to go back to the House for concurrence with Senate amendments, the measure will die at adjournment and the tax will remain in place.
The measure also would suspend to June 30, 2023, the state tax on marine fuel (5 cents a gallon) and aviation gas (4.7 cents a gallon).
The governor and multiple legislators have been pushing for the tax holiday to provide a small relief for consumers paying the highest prices at the pump in years. Though the bill says dealers “shall reduce the cost of fuel to the final consumer” by the amount of the tax break, there is no enforcement mechanism, and the tax is assessed at the wholesale, not retail level.
Critics of the tax holiday argue that Alaska’s motor fuel taxes are the lowest in the nation, haven’t changed in a half-century, and the tax revenues are needed for road maintenance.
The legislation was amended in the Senate Transportation Committee last week to include a new licensing fee of $50 on plug-in hybrid vehicles and $100 for fully electric vehicles, to compensate for the fact that their owners don’t contribute the same to state revenues as vehicle owners who pay taxes on the gasoline or diesel they buy.
Separate from the motor fuel tax, the legislation, sponsored by Anchorage Rep. Andy Josephson, would increase the state tax on refined fuel products by about half-a-penny per gallon to boost funding for Alaska’s spill prevention and response program.
Josephson said the small increase would help the account, which is supposed to be self-supporting, remain viable for its important work. The account is used to clean up spills at service stations, dry cleaners and other sites around Alaska.
The half-cent increase is estimated to raise about $3.6 million a year for the Spill Prevention and Response Division at the Department of Environmental Conservation.
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