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Massachusetts House Leaders Propose 5-Cent Gas Tax Increase

Democratic House Speaker Robert DeLeo said the money is needed to help pay for repairs to the Massachusetts Bay Transportation Authority

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Massachusetts House leaders proposed a 5-cent per gallon gas tax hike on Wednesday as part of a larger bill aimed at increasing funding for transportation.

The proposal would also increase fees on ride-hailing services and end the state's sales tax exemption for the purchase of vehicles by rental car companies. It would also increase the state's corporate minimum tax.

The package is expected to generate between $522 and $612 million annually.

Democratic House Speaker Robert DeLeo said the money is needed to help pay for repairs to the Massachusetts Bay Transportation Authority — the public transportation system in the metropolitan Boston area — as well as maintain roads and bridges in other areas of the state.

"This should be no surprise," DeLeo said. "When it comes to our transportation system, revenue can't wait."

DeLeo pointed to a range of recent transportation woes in the state, from subway train derailments to rising commute times to crumbling bridges.

Besides increasing the state gas tax from 24 cents to 29 cents per gallon, the bill would tack on an additional 4 cents on diesel fuel — also currently taxed by the state at 24 cents per gallon — resulting in a 9-cent per gallon tax increase on diesel fuel.

The gas tax hike is expected to bring in an extra $150 to $175 million annually, while the diesel tax increase would bring in an extra $32 million.

The bill would also hike fees on ride-hailing services like Uber and Lyft. The fee on non-shared rides would increase from 20 cents per ride to $1.20 per ride. The fees for luxury rides would jump by $1 per ride to $2.20. The fees for shared rides would remain at 20 cents.

The increased fees are expected to bring in up to $145 million more annually. The bill would retain a provision that the companies can't pass the fee hike on to customers.

Representatives from Lyft and Uber said the companies oppose the hikes.

"Raising rideshare taxes by over 500% could hurt low-income riders and reduce the transportation options available, especially for those outside Boston," Lyft spokeswoman Campbell Matthews said in a statement.

Uber spokeswoman Alix Anfang called the fee proposal "a significant tax increase that will disproportionately harm working families."

The bill's proposal to end the sales tax exemption currently enjoyed by car rental companies for their vehicle purchases could bring in another $110 million, according to House leaders.

It would also revamp the state's tiered system of corporate fees based on annual sales in Massachusetts, with no change for companies with fewer than $1 million in sales to a maximum annual fee of $150,000 for companies with annual sales of $1 billion or more.

A goal of the bill, which is expected to come up for a vote next week, is to build up the state's transportation fund and borrow against it for future transportation needs.

Republican Gov. Charlie Baker has been cool to new taxes but has also pushed a regional, multistate pact that would tackle transportation emissions while also increasing the price of gas from 5 cents to 17 cents per gallon.

House leaders said if the plan is ultimately adopted, the 5-cent gas tax in their bill would account for the first 5-cent increase as part of the pact instead of being an additional tax burden.

The bill would also create a commission of experts to study congestion pricing and tolling systems designed to change commuter behavior.

The funding generated from the bill would, in part, help the state maintain its statutory annual transfer of about $160 million to the MBTA. Money would also go to regional transit authorities and rural transit assistance.

Democratic Rep. Ronald Mariano, a member of DeLeo's leadership team, said the bill is only a start, given the state's daunting transportation needs.

"This is just the beginning," Mariano said. "We understand that there is more work to be done and more revenue to be generated."

Copyright AP - Associated Press
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