New Revenue Subcommittee Recommendations

Criteria Elasticity Elasticity Ability to phase in Ability to phase in User-based User-based Yield Yield Ease of administration Ease of administration

Strongly Recommended: Indexing Gas and Diesel Excise Taxes Indexing Gas and Diesel Excise Taxes New Excise Tax on Wholesale Price of Gas and Diesel Fuels New Excise Tax on Wholesale Price of Gas and Diesel Fuels

Indexing Gas & Diesel Tax to Construction Cost Index-3 Restores and Preserves Purchasing Power Restores and Preserves Purchasing Power Elastic Elastic Uses existing collection system Uses existing collection system PROPOSED FEATURES:  Automatic adjustments by DFA  2¢ per year ceiling on increases  Hard floor - Adjusted tax can’t go below previous year’s rate

Excise Tax on Wholesale Price of Motor Fuels Elastic Elastic Can be phased- in Can be phased- in Can raise substantial revenue Can raise substantial revenue Uses existing collection system Uses existing collection system Avoids problems associated with a sales tax on motor fuels Avoids problems associated with a sales tax on motor fuels

Recommended for Consideration: Special Sales Tax on New and Used Autos Special Sales Tax on New and Used Autos  User based  Administered through existing mechanisms

Not Recommended at This Time: Vehicle Miles Traveled Fee Vehicle Miles Traveled Fee  Uncertain collection methods  Privacy concerns  Absence of federal standards Carbon Tax Carbon Tax  Not elastic  Not strictly a user fee Public Private Partnership/Tolling Public Private Partnership/Tolling  Not viable, reassess periodically

Not Recommended: Income tax Income tax General Sales Tax General Sales Tax Remove Sales Tax Exemption on Motor Fuels Remove Sales Tax Exemption on Motor Fuels Special Sales Tax on Auto Parts and Services Special Sales Tax on Auto Parts and Services

Remove Sales Tax Exemption on Motor Fuels Streamlined Sales Tax Agreement would require levying the full 6% state sales tax, plus local sales taxes immediately, resulting in major increase in price of fuel to consumers Streamlined Sales Tax Agreement would require levying the full 6% state sales tax, plus local sales taxes immediately, resulting in major increase in price of fuel to consumers Would apply to final purchase price including federal excise taxes, making it a tax-on-a-tax Would apply to final purchase price including federal excise taxes, making it a tax-on-a-tax

Needs Further Study: Weight Distance Tax Weight Distance Tax  High collection costs and inefficiencies  Traditional license and excise fees preferred by trucking industry  Lack of empirical analysis to determine trucking industry “fair share” Dedication of Streamlined Sales Tax Agreement revenue to transportation Dedication of Streamlined Sales Tax Agreement revenue to transportation License Fees and Miscellaneous Revenues License Fees and Miscellaneous Revenues

POLICY BRIEFS Adjustment Factors Adjustment Factors Income Tax Income Tax Sales Tax Options Sales Tax Options  General Sales Tax  Special Sales Tax on New & Used Autos  Sales Tax on Auto Parts and Service Remove Sales Tax Exemption on Fuels Remove Sales Tax Exemption on Fuels New Excise Tax on Wholesale Price of Fuels New Excise Tax on Wholesale Price of Fuels Excise Tax on Gas and Diesel Excise Tax on Gas and Diesel Vehicle Miles Traveled Tax Vehicle Miles Traveled Tax Carbon Tax Carbon Tax Equitable Share for Heavy Trucks Equitable Share for Heavy Trucks Public Private Partnerships/Tolling Public Private Partnerships/Tolling

Adjustment Factors Vehicle Miles Traveled Vehicle Miles Traveled Average Fleet Fuel Efficiency Average Fleet Fuel Efficiency Fuel Prices Fuel Prices Construction Cost Inflation Construction Cost Inflation

Analysis Tool Sets Level 1 Indexed Targets Sets Level 1 Indexed Targets Calculates VMT and FFE Impacts Calculates VMT and FFE Impacts Gas and Diesel Excise Taxes Gas and Diesel Excise Taxes Excise Tax on Wholesale Price of Fuels Excise Tax on Wholesale Price of Fuels Special Sales Tax on New & Used Autos Special Sales Tax on New & Used Autos Transfer of Sales Tax on Auto Related Items Transfer of Sales Tax on Auto Related Items