Modest increase to motor fuel tax passes Senate

Legislation boosting tax rates on road and marine motor fuels to 16 cents and 10 cents respectively passed the Alaska Senate by a vote of 12-5 on Monday, March 2, and moved to the House for consideration.

Senate Bill 115, sponsored by Sen. Click Bishop, R-Fairbanks, is estimated to generate some $35 million in additional state revenue if passed into law.

“This is a meaningful step toward funding the state’s backlog of transportation infrastructure and maintenance needs,” said Bishop. “A modest increase in transportation funding will improve public safety, stimulate economic growth and provide good-paying jobs for Alaskans.”

Alaska’s motor fuel tax rates have not changed for 50 years.

Since then every other state has gradually increased its motor fuel tax rates. Alaska’s 1970 rate, adjusted for inflation, would be roughly 52 cents today, meaning the tax has lost about 85 percent of its purchasing power since 1970.

Still with this increase Alaska would have the lowest marine fuel tax rate in the nation and the ninth lowest highway fuel tax rate. Current law sets the per gallon base tax rates for highway fuel at 8 cents and marine fuel at 5 cents.

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The bill does not propose boosts to aviation or jet fuel tax rates. Alaska currently ranks 40th for aviation fuel and 36th for jet fuel.

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