With a fuel tax that hasn't risen since 1990, Tennessee lawmakers set their sights on comprehensive reform to beef up the state's transportation infrastructure.
Tennessee lawmakers are pushing for the state’s first fuel tax increase in a quarter-century.
Several proposals to raise gas taxes have reached the legislature as the state is looking for additional revenue to address transportation projects across Tennessee. Reports have shown a gas tax increase is unlikely to pass this year, though if passed, higher taxes could negatively impact some businesses.
Tennessee’s gas tax has remained unchanged since 1989, while the diesel tax hasn’t increased since 1990, according to a recent report released by the state’s comptroller’s office. The comprehensive fuel tax would need to reach 38 cents in 2014 to be equivalent to the 20-cent tax set in 1989. These revelations have prompted proposals to increase fuel taxes in the state.
“Issues like this look very simple on the surface,” says NFIB Tennessee state director Jim Brown. “They never are.”
Tennessee Gov. Bill Haslam and House Speaker Beth Harwell have already stated a fuel tax hike isn’t likely this year until a clear plan for the new revenue can be shown to lawmakers. Brown noted some members have expressed the importance of reviewing inefficiencies in the regulatory and implementation processes for road building and upkeep before having a debate about tax increases.
What This Means For Small Business
While something may need to be done to address the state’s transportation revenue, higher taxes can hit small business hardest and could result in higher prices for consumers.
“There are pros and cons, of course,” says Brown. “Many of our members have significant fleets. They have many trucks, and it will be difficult for them to pass on any tax increase to their customers. It would mean higher prices for some customers of those businesses. It will put some pressure on margins.”
Higher taxes may be temporarily offset by lower fuel costs, but Brown explains that reviewing proposals in short-term circumstances is unwise, as prices are likely to shift.
“What’s occurring right now could be very different in six weeks or six months or six years,” Brown explains. “So any proposal that is out there needs to be viewed in the context of the near future and in the long term.”
Some members, Brown noted, have also said Tennessee’s roads and bridges, while better than in most states, must remain in good shape to attract and retain businesses and promote commerce.
NFIB will soon seek comments and opinions from Tennessee members regarding comprehensive gas tax reform.
“Any comprehensive proposal for a gas tax, we will engage the membership and we will need their feedback,” says Brown. “Certain proposals may resonate with some members, while others likely will not. We’ll need to understand what may be acceptable and what are non-starters.”