The Iowa DOT estimates the state could collect about $40 million a year from farmers and construction companies if the tax exemption for so-called “red dye” fuel was lifted — and a few lawmakers are questioning why that tax advantage is being maintained.
Farmers and construction companies that primarily operate diesel-powered machinery off of the state’s roads buy fuel that has a dyed with a red tint, to signify it is not subject to the state’s fuel tax.
Representative Ralph Watts, a Republican from Adel, says the size of farming operations has grown significantly and heavy farm equipment is now being driven on more miles of road to get from field to field.
“If you live in a rural area, you meet them all the time,” Watts says. “The heavier equipment with cleated tires place more stress on the roadway than vehicles with road tires.”
That “additional stress” is taking a toll on rural roads and bridges, according to Watts.
“The need for moving manure from hog confinements has become a huge factor for rural roads where the movement of manure is done by large tank wagons pulled by farm tractors over the roads,” Watts says. “My personal experience in watching this happen showed me those movements literally pulverize the existing gravel, which requires replacement.”
Watts tried, but failed this past week to get his fellow legislators to go along with charging just a 10-cent-a-gallon state tax on red dye fuel.
“Some misguided miscreant might ask: ‘What do you have against farmers?'” Watts said during House debate of the bill that raised the state’s motor fuel tax by a dime a gallon. “I have nothing against farmers. Although I am not a farmer, I am a member of the Farm Bureau — at least I was earlier this morning.”
The Iowa Farm Bureau opposes the idea of taxing the diesel fuel that’s used in farm equipment. Only eight other members of the Iowa House joined Watts this past Tuesday to try to force a debate over his proposal, while 87 voted against Watts and his idea was permanently tabled.