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Gas Tax Battle Begins at the Minn. Capitol

Created: 02/18/2014 11:09 PM WDIO.com

A transportation advocacy group called "Move MN" is making a move to increase the gas tax. However, it wouldn't be your traditional per gallon gas tax increase. Instead, the group proposes a 5 percent sales tax on wholesale fuel so tax revenue would grow as prices increase.

Unlike a per-gallon fuel tax on consumers at the pump, wholesalers would pay the 5 percent tax on the fuel supplies they buy.

"Going forward then we would have a system that would keep up with inflation, which the per gallon tax never will," says Margaret Donahoe of the Minnesota Transportation Alliance. She testified before a joint House-Senate Transportation Committee Tuesday afternoon.

A similar proposal was debated in the Minnesota Senate last year. GOP Senator Dave Osmek says testimony then indicated it would increase the price of gas 15 cents per gallon after wholesalers pass the tax on to consumers.

"This 15 cent per gallon is going to be passed along to the customer," says Osmek, " whether that's a residential customer, whether that's a trucker. It doesn't matter who it is."

The "Move MN" proposal also includes a 3/4 cent increase in the metro area sales tax to raise money for mass transit. The proposal will likely get additional hearings after the Minnesota Legislature convenes next week.

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