KY "gas tax" to drop 4.3 cents on January 1st - WDRB 41 Louisville News

KY "gas tax" to drop 4.3 cents on January 1st

Posted: Updated:

FRANKFORT, Ky. (WDRB) – Area gas prices could continue to fall because Kentucky's "gas tax" is dropping by nearly a nickel a gallon.

The drop in gas prices across the state is affecting how much drivers will soon have to pay in taxes.

"Right now it's going down, but it would be great if it would go down a little bit more," said motorist Michaela Dempsey. "Five cents is five cents, how I look at it is a penny is a penny."

The gas tax will drop by 4.3 cents on January 1st. It's the biggest change since the 80's.

"It will add up eventually," said Dempsey.

Saving sounds good to driver, but to the transportation cabinet, it'd mean a significant drop in revenue.

The Kentucky Road Fund, will lose more than $100 million a year.

"The rule of thumb,” said KYTC Spokesman Chuck Wolfe, “is that a penny of the gas tax generates about $30 million a year. So you're talking about 4.3 pennies and that equates to $129 million on an annualized basis."

The tax is calculated every three months. The state Department of Revenue surveys the average wholesale price of fuel, which back in October it was $2.35 per gallon. That number is then multiplied by 9% as mandated by the state. That comes out to 21.2 cents, or a drop of 4.3 cents from the current rate.

Kentucky's highway program is funded by people who use it. General taxes on sales, income, payroll or property are not included. New construction and repairs may soon be put on hold.

"If you end up having to compensate for a loss of that much money, something has to give, something is going to suffer somewhere down the line," said Wolfe.

And some drivers do not want that.

"You gotta have the roads and the bridges and the infrastructure, or you know, we're not gonna be able to travel on them," said Brad Jones of Lexington.

The state will recalculate the tax in January.

If prices go down even more, the rate would drop again in April.

Copyright 2014 WDRB News.  All rights reserved.

Powered by Frankly
All content © Copyright 2000 - 2017 WDRB. All Rights Reserved. For more information on this site, please read our Privacy Policy, and Terms of Service, and Ad Choices.