Impact of Minnesota gas tax hike proposal

Published: Mar. 1, 2019 at 8:52 PM CST
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There's new information on a proposal by Minnesota's Governor to significantly raise the state's gas tax. Governor Tim Walz is calling for a 70% hike, raising the gas tax from 28.6 cents per gallon to 48.6 cents per gallon. North Dakota's gas tax stands at 24 cents per gallon.

The Fargo-Moorhead West Fargo Chamber of Commerce opposes the idea saying the plan threatens border cities such as Moorhead, as they compete with surrounding communities and states.

Minnesota has a law to cushion noticeable differences in gas taxes between bordering states. Representative Paul Marquart says if a Minnesota business is within 7.5 miles of a border and if the gas tax is more than three cents higher in Minnesota than a neighboring state, Minnesota gas distributors, like those in Moorhead, Dilworth, East Grand Forks and Breckenridge receive a credit for the cost over three cents. It's happening right now. The difference between North Dakota and Minnesota's gas tax is 4.6 cents. Those, who sell gas in those cities are compensated 1.6 cents per gallon. That's money that's coming from the state's general fund, which is Minnesota taxpayers.

It means that any further increase in the gas tax would not impact these gas stations from a gas standpoint.

However, if the price goes up because of the tax and prompts you to buy in North Dakota, where its cheaper, then you won't be buying other items from these Minnesota businesses. I'm referring to items like snacks and soda, which are often purchased along with the gas. These sales make up a significant difference in their bottom line.

That's what has the local chamber of commerce concerned. It's pushing for a business friendly environment in Minnesota and doesn't support raising the gas tax. Not that much!

Representative Paul Marquart of Dilworth calls the Governor's proposal a starting point, saying it's certainly too high. He says rural Minnesota pays 53% of the current gas tax, but get's 68% back because of the formula that benefits rural Minnesota.