Thursday, June 07, 2001

Gas tax in Ky. may rise by fall

Portion of rate linked to wholesale price

By Mark R. Chellgren
The Associated Press

        FRANKFORT — Kentucky's gas tax won't go up this month, but it's getting close to an increase.

        A nearly forgotten provision of a 1982 increase in the gas tax technically ties a portion of the tax to the average wholesale price. If the average wholesale price rises above $1.11 for a gallon, a penny will be added to the tax.

        Revenue Cabinet spokesman Alex Rose said the April survey found an average wholesale price of $1.09. The next survey will be conducted in July, and the additional penny on the fuel tax could take effect in October.

        Any tax increase is capped at a penny in any single year and a total of 3.5 cents, regardless of what happens to the wholesale price. If the wholesale price drops below the threshold, the tax would revert.

        Kentucky imposes taxes of 16.4 cents per gallon on gasoline and 13.4 cents on diesel.

        But the basic tax is not really 10 cents a gallon. Instead, it is 9 percent of the average wholesale price of a gallon of gas, based on a minimum assumed price of $1.11, which produces a 10-cent per gallon tax. Added to that is 5 cents not subject to revision and another 1.4 cents that goes specifically to clean up old underground storage tanks.

        The wholesale price bears little resemblance to the price at the pump. According to the Bluegrass Automobile Club survey, the average retail price for a gallon of regular unleaded was $1.65.5 on Wednesday.

        If it comes, the tax increase would benefit a strapped Road Fund. Each penny increase in the tax means about $27 million.


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