Vermont Gas Tax Increases on May 1

Vermont became the third state this year to legislatively increase its gas tax when Democratic Gov. Peter Shumlin signed the bill on April 29 that raises the gas tax by 5.9-cents and the diesel tax by 2-cents on July 1 and 1-cent next year.

Gov. Matt Mead (R-Wyoming) led the way, followed by Gov. Martin O'Malley (D-Maryland). Gas taxes will also increase this year in California and are slated to rise in Connecticut, but without legislative action.

Burlington Free Press staff explain the details of the tax increase:

The tax is a net increase of 5.9 cents per gallon. That includes a new 2 percent assessment on the price of gas, while the per-gallon tax decreases by 0.8 cents. Officials changed the tax from a per-gallon to a percentage amount.

According to the Tax Foundation list of state gas tax rates as of Jan. 01, the Vermont gas tax was a 19-cent excise (per gallon) tax and 7.7-cents in "other taxes and fees".

The bill was similar to gas tax legislation in Maryland and Virginia (which decreased its total gas tax by eliminating the excise tax, increased the general sales tax, and added a new registration fee for hybrid and electric vehicles) in introducing a new percentage-based tax on the price of gasoline that will increase revenue should the price of gas increase.

Unlike the aforementioned states, the Vermont legislature was prompted to act for a very specific reason, writes John Dillon of Vermont Public Radio.

The goal behind raising the fuel taxes was to match $56 million in federal funds targeted for road and bridge repair...Gov. Peter Shumlin and legislative leaders said without the tax, Vermont would not be able to spend some of the federal money.

"To risk not losing the federal money it had to raise $36.5 million. They chose the option of raising the diesel and gas tax to make up for the shortfall", writes Connie Madon for Vermont Business.

Legislators who voted for the gas tax increase did so despite an overwhelming 56% opposition according to the Doyle Town Meeting survey

No word yet on the 12-cent gas tax increase being deliberated by the New Hampshire state senate.

Full Story: Shumlin signs gas tax increase that takes effect Wednesday

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