Taxes jack up local gas prices

Published 12:00 am Wednesday, November 21, 2007


As gas prices continue to creep higher, people have begun to look at the taxes on fuel.

Lowell Butts, owner of Crossroads Exxon at the intersection of Alabama highways 219 and 22, said high gas prices hurt businesses, not just consumers. &8220;People don’t have as much money to spend inside,&8221; Butts said.

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In addition to refinery, distribution and marketing costs, taxes are an additional portion of what drivers are shelling out every time they hit the pump.

In Selma, drivers pay a share of federal, state, and local taxes. These taxes include an inspection fee tax, an aboveground/underground storage tank fund tax, a city police jurisdiction tax, a county gas tax, and a freight surcharge that essentially functions as a tax.

These funds are allocated for use on city, county and state infrastructure, including roads.

The federal gas tax is 18.4 cents per gallon and the state of Alabama, 16 cents. Revenues generated by this tax fund highway construction and repair.

The state inspection fee tax, to cover the cost of inspecting fuels as they are withdrawn or imported, is two cents per gallon.

The Alabama Aboveground and Underground Storage Tank Fund tax is one cent per gallon. This tax covers the cost of fuel withdrawal from a storage facility, and money is used to reimburse tank and facility owners.

For the fiscal year 2006-2007, which began Oct. 1 and ended Sept. 30, tax revenues from the Alabama Aboveground and Underground Storage Tank Fund tax netted $36,769,207.29. The basis of the tax is levied on the first withdrawal of motor fuel from a storage facility, or when it is imported into Alabama.

From the Selma police jurisdiction tax, two cents per gallon levied at the pump, revenues are automatically deposited into the city’s general tax revenue fund.

The tax is levied on all areas within the city’s police jurisdiction, which extends three miles outside city limits except to the north. The city of Valley Grande collects the tax at pumps to the north of the city.

Drivers also pay an Environmental Transport Fee , which covers the cost of assuring the fuels do not harm the environment in transport, levied at a rate of one cent per gallon, which is funneled into a trust fund and utilized like the storage tank fund.

Based on figures from a cumulative list of tax rates, taxes on Selma gasoline run at approximately 39.4 cents before local taxes are factored in and 43.4 cents per gallon after. The U.S. average is 44 cents per gallon, before local taxes are added in. Alabama local tax rates remain among the lowest in the nation.