Staff Analysis of the Legislation
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This legislation completely exempts motor fuel from state sales and use tax and increases the second motor fuel tax from 3 percent to 4 percent. The net effect of these two changes is that an extra penny becomes motor fuel revenue which is constitutionally dedicated to the Department of Transportation. Additionally, the bill lowers the state income tax brackets. Finally, the bill provides for a phased-in increase in the first motor fuel tax tax from 7 1/2 cents per gallon to 22 1/2 cents per gallon, followed by indexed increases, and followed by further increases if the federal excise tax on gasoline is repealed. |
