(The Center Square) – A Tennessee legislator has filed a bill that would lower gas taxes in the state, revoking the increases that were approved in the IMPROVE Act in 2017.
House Bill 1650, proposed by Rep. Bruce Griffey, R-Paris, would lower the 26 cents per gallon tax to 20 cents for gasoline and to 17 cents per gallon for diesel fuel from the current 27 cents per gallon rate.
“I was opposed to the gas tax increase when it passed back in 2017, and vowed to take action to fight it if elected to office, and I’m doing just that,” Griffey said. “With gas prices exponentially rising due to inflationary pressures from bad, reckless policies of the Biden Administration, it is imperative now more than ever to provide financial relief to Tennesseans at the pump.
“My bill proposes to repeal the 2017 gas tax increase and instead divert funds from the State’s budget surplus to fund transportation and infrastructure projects.”
The gas tax is expected to generate $896 million this fiscal year with each penny of tax representing $32.7 million per year, according to the Tennessee Department of Transportation (TDOT). That means a 6 cents cut in the tax would be a $196.2 million loss in tax revenue.
Of the gas tax revenue expected this fiscal year, $332.2 million would go to cities and counties, $25.8 million would go to the state’s general fund and $538.1 million would go to TDOT.
The TDOT funds are part of the department’s $1.3 billion annual budget spent on resurfacing roads, bridges, major construction, highway maintenance costs and basic operating costs.
Griffey’s bill proposes to replace the lost gas tax revenue with sales tax revenue. He cited the state's $3.1 billion over budget in sales and fee tax revenue collected last fiscal year and the $1.2 billion collected over estimates this fiscal year.
"Under my legislative proposal, the State would continue funding transportation and highway projects at the same financial level while at the same time giving tax relief to its citizens," Griffey said. “We wouldn’t miss a beat with our infrastructure projects because Tennessee has the money. In fact, our coffers are overflowing and we are on a continued revenue growth trajectory, which is why the legislature needs to be looking at reasonable ways to effect responsible tax reform and mechanisms to return excess tax collections to taxpayers.”
Former Gov. Bill Haslam touted the IMPROVE Act as an overall tax cut as it replaced $125 million in grocery taxes and $113 million in business taxes for manufacturers with the gas tax, paid by residents and visitors who fuel up in the state.
It was touted as the largest tax cut in state history while increasing registration fees for vehicles, including a $100 registration fee for electric vehicles. It also phased out the Hall income tax for those receiving interest on bonds and dividends from stock.
“We are here today to sign the IMPROVE Act, which means a lot of things,” Haslam said in 2017. “First of all, the largest tax cut in the history of the state of Tennessee. Second, finally a way to address the long term road and bridge needs we have.”
Haslam said at the time the bill was not about only building new roads but also about fixing the roads currently in the state, such as the I-75 and I-24 interchange in Chattanooga, which had 100,000 vehicles per day.