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Motorists give mixed reaction to refund plan for Missouri fuel tax hike

First state tax increase since 1996 adds 2.5 cents to the price of gasoline, diesel

Pump prices for gas and diesel haven’t changed much in Missouri, despite Friday’s being the first day of a 2.5 cents-per-gallon increase in the state fuel tax.

The cheapest gas in the state was $2.49 a gallon in Springfield, according to GasBuddy.com.  That was unchanged from earlier in the week. The most expensive, AAA of Missouri reports, is in Knox County, where the average price is more than $3. Statewide, motorists were paying an average of $2.88 a gallon to fill up on Friday.

And for many motorists, it is that pump price – up more than a $1 since late last year – that’s important. Many did not know that the tax had increased, and some who did said they were not aware that lawmakers included a way to get a refund of the new tax.

Crystal Lander, filling up at a convenience store near Interstate 70 in Columbia, said she was unlikely to do the work necessary to claim her refund. She doesn’t collect receipts of her fuel purchases, and said tracking her fuel use, even when the phased-in tax has added 12.5 cents per gallon, won’t be worth the trouble.

“It doesn’t really kill the pocketbook,” she said.

When lawmakers voted for the increase in May, it was the first time the Legislature had passed a tax increase of any kind since 1993 without referring it to voters for approval. The last fuel tax increase was in 1996 when the third phase of a 1992 law became effective.

The fuel tax, previously 17.4 cents per gallon on gasoline and diesel, is 19.9 cents per gallon as of Friday.

Additional increases are scheduled for July 1 each year until the tax reaches 29.9 cents per gallon on July 1, 2025.

Motorists asked about the tax as they filled their vehicles on Friday said they would be happy to forgo a refund in exchange for better roads.

“Absolutely, absolutely,” said Tom Heintz of Columbia.

The legislation, which also includes increased fees for alternative fuel vehicles, will, before refunds are calculated, raise about $1.8 billion in the next five years, with $1.3 billion for state highways and $500 million for city and county governments to build and repair their roads.

One idea on the shelf for a decade is to widen Interstate 70 to three lanes in each direction. 

“Oh God, yes, I do want that,” Heintz said. “I don’t go on I-70 very often if I can avoid it.”

The refund provision was included in the bill to placate conservatives who oppose any tax increase that is not approved by voters. It applies only to the new tax.

To obtain the refund, motorists must make a claim each year between July 1 and Sept. 30. The claim must include how many gallons were purchased for each vehicle operated by the family or business that owns it.

Receipts to prove the claim must have the name and address of the retailer, the price paid for fuel, the total gallons pumped and show that the payment was made at the time of purchase. 

The refund is not available to companies operating trucks with a rated capacity of more than 26,000 pounds, which means that operators of long-haul semi-trucks will not be eligible.

“We supported that provision,” said Tom Crawford, president of the Missouri Trucking Association. “When we worked this bill through the legislature, our group was saying let’s just exclude diesel completely.”

Under the International Fuel Tax Agreement, long-haul trucks do not gain a cost advantage by purchasing fuel in low-tax states like Missouri. Truckers must report the mileage driven through every state or Canadian province. The taxes they pay when purchasing fuel give them a credit against the tax on fuel consumed while in any particular state or province.

Trucks that purchase fuel in low-tax states but travel in high-tax states owe money when they make their reports. Trucks that buy fuel in high-tax states and travel through low-tax states can end each reporting period with a credit to their account.

“It has been a pain but it works and we have operated under it for 30-some years,” Crawford said. “The argument I was making to increase the fuel taxes was that whatever we need to do (to comply with constitutional limits on taxes), do it, but our tax is so low it was driving fuel purchases out of the state because (trucking companies) couldn’t get enough in their accounts to drive outside of the state.”

Only Alaska had a lower fuel tax than Missouri before the increase. The average of the eight surrounding states is 30 cents per gallon, with the highest in Illinois at 59.56 cents per gallon. The federal tax is 18.3 cents per gallon for gasoline and 24.3 cents per gallon for diesel.

The cut-off was set at 26,000 pounds because trucks smaller than that are mainly used for local and regional deliveries, Crawford said.

Exactly what the Department of Revenue will require for motorists who wish to claim the refund is uncertain because the forms have not been created. A question-and-answer page on the department’s website states the forms will be available before the first claims are allowed on July 1.

The amount of any refund for a motorist who owns just one or two vehicles is likely to be less than the cost of a full tank. A motorist who drives 10,000 miles in a vehicle that averages 25 mpg will use 400 gallons of fuel in a year.

That is $10 a year for every 2.5 cents the tax increases.

Stephen Chadwell

When told that calculation, the reaction of motorists on Friday was mixed. Stephen Chadwell of Columbia, who did not know about the tax increase or refund, said he would keep his receipts.

“I think for 10 bucks it might be worth it,” Chadwell said. “Ten bucks is 10 bucks.”

The financial estimate prepared for the bill estimated that refunds could be as little as 15 percent of the tax collected or most of it. If 15 percent is refunded, it will reduce revenues by about $175 million over the first five years of the tax.

For Columbia resident Jim Roling, who knew about both the tax increase and the refund provision, tracking purchases and keeping records to make a claim is too much trouble. He said a friend with whom he has discussed the tax has vowed to seek every dollar of refund.

“I am all about $10,” Roling said, “but I’m not going to keep receipts for a year.”

This article by Rudi Keller is published by permission of The Missouri Independent.

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