Idahoans, by a 2-1 margin, do not appear to support a bill passed by the Legislature that will dramatically increase taxes on natural gas used as a fuel in cars and trucks.

A new poll conducted by Dan Jones & Associates shows that 60 percent of Idaho adults support maintaining the natural gas tax incentive, while 31 percent want the tax break eliminated, thus raising the tax, and 9 percent of respondents had no opinion.

In addition, some 55 percent of respondents support a program that would provide tax breaks to encourage adoption of natural gas vehicles, while 35 percent oppose such a program.

Natural gas is gaining popularity as a vehicle fuel both by ordinary car owners and also by truckers and fleet operators. Natural gas burns cleaner and is less costly than diesel and gasoline. However, natural gas industry representatives say the higher tax will dramatically reduce the motivation to switch to natural gas, and may destroy the natural gas vehicle industry in Idaho.

The legislation, HB132, which passed the House by a wide margin and was narrowly approved by the Senate, now awaits Gov. Butch Otter’s signature or veto.  

Some trucking companies that had been planning to convert engines to natural gas, or purchase new natural gas trucks, are reconsidering their plans in light of the higher tax. Industry representatives say that the bill will result in a 1,400 percent fuel tax increase for a heavy-duty natural gas truck driving an average of 70,000 miles a year in the state.

The higher tax is discouraging to the natural gas industry, especially because buying a new heavy-duty natural gas truck costs $80,000 to $100,000 more than a diesel truck. Purchasers of the more expensive trucks pay about 53 percent more in sales taxes than purchasers of diesel or gasoline vehicles.

Supporters of increasing the tax argue that alternative fuel vehicles produce wear and tear on the roads, so they should pay highway taxes at the same rate as diesel and gasoline vehicles.

Natural gas and clean air advocates don’t dispute that sentiment, but say the tax should be phased in over a number of years to give the nascent natural gas vehicle industry a chance to get established, for the prices of natural gas engines and other equipment to come down as the industry grows and matures, and to provide some level of certainty and fairness to those fleets that have already invested in vehicles. They note that HB132 represents an about-face from pro-alternative fuel policy positions established and approved by the Legislature in its 2012 Energy Plan, partially in response to EPA threats to place Idaho in non-attainment due to poor air quality.

They also argue that societal value exists in cleaner air and in using clean domestic energy that produces jobs and economic growth, rather than using imported oil. Natural gas is now being produced in Idaho, so it makes sense to support those jobs and use it in vehicles.

Rural fleets servicing eastern Idaho’s agricultural industry, like McNabb Trucking out of Pocatello, and Rich Thompson Trucking in Jerome, express frustration that the Legislature would change its policies so drastically just after those fleets made significant investments in equipment based, in no small part, on those very policies. Fleets also point out that they pay 70 percent more in federal fuels tax on liquefied natural gas than diesel. With the passage of HB 132, natural gas will pay 66 cents in tax per diesel gallon equivalent to the 49 cents paid by diesel.

Increasing the tax to make it equal to taxes paid on gasoline and diesel is expected to boost transportation revenues by about $375,000 a year, according to the fiscal note on the legislation.  That’s not enough to do even a small transportation infrastructure project.

The Dan Jones & Associates survey was conducted March 20-26, using a random sample of 600 Idaho adults, and has a possible error margin of plus/minus 4%.

 

The fuel tax on natural gas is lower than the tax on gasoline and diesel fuel. The intent of a lower tax on natural gas vehicles is to encourage Idahoans to drive vehicles with lower exhaust emissions.

Do you believe the natural gas tax incentive should be maintained or eliminated?

 

 

 

Total

 

(number responding)

606

 

Definitely maintained

26%

 

Probably maintained

34%

 

Probably eliminated

15%

 

Definitely eliminated

16%

 

Don’t know

9%

 

 

Do you favor or oppose a program that would give tax breaks to encourage adoption of natural gas vehicle technology?

 

 

 

Total

 

(number responding)

606

 

Definitely favor

18%

 

Probably favor

37%

 

Probably oppose

18%

 

Definitely oppose

17%

 

Don’t know

9%