Governor Terry Branstad says he’s open to continued discussions about how to find new funding sources for road and bridge construction in Iowa, including the idea of imposing the state sales tax on fuel.
“That kind of an approach is an approach that has been used now recently by a number of other states and its one that would be more of a permanent solution,” Branstad says.
Charging the six-percent state sales tax on fuel sales would add far more to the cost of filling up the tank than just raising the state gas tax by 10 cents a gallon. For example, someone buying 10 gallons of gas would pay $1 more if the state gas tax went up a dime. But, if the state sales tax were charged on that transaction, the consumer would pay $2 more.
“Anything you do, obviously, the users are going to have to pay for it,” Branstad says.
The state fuel tax hasn’t been hiked since 1989, when gas was selling for less than $2 a gallon. The average price today in Iowa is $3.37 a gallon. Branstad says charging the state sales tax on fuel purchases would keep up with inflation.
“Going away from the old-fashioned gas and diesel fuel tax, to me, makes sense,” Branstad says.
But the governor is not calling on legislators to pass a bill that would make the change. Branstad has repeatedly said he’s waiting for a “bipartisan consensus” to develop in the legislature. According to Iowa DOT estimates released a couple of years ago, the state is at least $215 million short of what’s needed to maintain and expand the state’s transportation network.
Branstad made his latest comments on the subject yesterday, during his weekly news conference. Find the audio here.