And it requires the commission to yearly – about this time – come up with the formula to tax consumer gasoline “at the rack” – literally the place where gas station owners buy their fuel in bulk at the oil refinery.
Just one of the problems said Valentine, is deciding what constitutes the “average” fuel bought.
Well, the commission did that after consulting the gas retailers and refinery folks.
Then there’s the question of which “racks” to consider.
OK. There are the oil refineries in North Salt Lake.
But there is also a “rack” distribution down in Cedar City – and the rack prices are not the same, but vary.
Lawmakers in the new bill said there would be a 5-cent per gallon tax hike coming thisJan. 1.
They didn’t want to raise taxes in 2015. That’s because the January-February-March general session saw $739 million in one-time and on-going tax revenue surpluses.
A big number.
And the GOP-controlled Legislature DID NOT give a tax cut to taxpayers.
So, considering all that extra tax money, the conservatives didn’t want to give a tax hike in such a revenue-rich year.
So, they wrote HB362’s state gas tax hike to take effect in the next year – Jan. 1, 2016.
Valentine said it was hard to find a formula which, placed on the average “rack” price, would come up with exactly a nickel tax hike.
The commissioners did the best they could.
So, it is now official: The Jan. 1 per-gallon tax hike will be 4.9 cents per gallon on regular non-leaded gasoline.
The price of crude oil is today below $40 a barrel – really low.
And the Saudis have apparently decided to continue pumping like mad – in an effort to drive the international price of oil down and make it uneconomical for U.S. oil firms to keep producing “fracking” oil, which costs more to get out of the ground.
HB362’s gasoline pricing formula bet on the price of oil going back up a bit – thus automatically increasing Utah’s gasoline tax and its take – all the new money going to help build/rebuild state roads and freeways.
There is a floor in HB362 – so the gasoline tax won’t go too low – and there is a ceiling – skyrocketing gas prices won’t take too much in tax, as well.
All this makes the Tax Commission’s job just that much harder – as Valentine’s sour face displayed.
But, the commission will do what is needed to comply, said Valentine – reserving the right to come back to the Legislature for some tweaks, if needed.
Meanwhile, a UtahPolicy poll published in early March 2015, conducted by Dan Jones & Associates, found that two-thirds of Utah’s favored some kind of gasoline tax hike to pay for better roads.
(The bill also allows counties, by a vote of citizens, to raise their local option sales tax by 0.25 percent to pay for local roads and mass transit. And Wasatch Front counties will be putting that voter option on this November’s municipal election ballots.)