Utah Governor Gary Herbert (R) on March 27 signed into law a bill to increase the state gas tax by 5 cents-per-gallon, create a 12 percent tax on the statewide average wholesale price of motor fuel to replace the flat gas tax in the future, and permit counties to seek voter approval for a 1/4-cent sales and use tax increase for local transportation projects.
The flat state gas tax increase to 29.5 cents-per-gallon will go into effect on Jan. 1, 2016. The 12 percent tax on the wholesale price of gasoline will not be enacted until the wholesale price reaches $2.45 per gallon, a point which lawmakers do not expect to occur for another 6-10 years. Once enacted, it will replace the flat state gas tax going forward. Limitations were put in place to prevent the tax from collecting less than 29 cents-per-gallon or increasing more than 40 cents-per-gallon. The state gas tax was last raised in 1997.
Upon signing the bill, Gov. Herbert stated, “A strong transportation infrastructure has played a critical role in our economic growth and it will continue to do so thanks to this bill. This session we took the necessary steps to address the discrepancy between the funds we have set aside for transportation and the funds we will need to support our growing population and keep commerce flowing through our state for decades to come.”