Think before applying for that fuel tax refund
September 30, 2021 - The Missouri Transportation & Development Council (MTD) and Associated Industries of Missouri (AIM) recently celebrated the passage and signing of a bill that increases motor fuel taxes to provide funding for transportation infrastructure improvements statewide. The first increase of 2.5 cents per gallon begins tomorrow, October 1, 2021. The bill allows individuals and businesses that have purchased fuel for lighter weight vehicles to save their receipts and apply for a refund of the fuel taxes that were increased in the bill.
Almost immediately upon passage of the bill, our member businesses began to ask if businesses could save receipts and apply for the refunds like individuals. The answer is "yes" for most business vehicles except some trucks (those over 26,000 lbs. do not qualify). But although businesses may apply for the refunds, should they? What is the most prudent business decision?
Here are some things for your business to consider before claiming a refund of the additional fuel taxes.
How much will the fuel tax increase cost my business?
Of course, that will depend on the type of vehicles you operate in your business. Passenger cars average 24.2 mpg and light trucks and vans average 17.5 according to U.S. Department of Energy statistics. If we assume an average of 12,000 miles per year for each type of vehicles, the average passenger car would use about 500 gallons of fuel per year, meaning when completely phased in at 12.5 cents per gallon, the fuel tax increase will cost the average car driver about $5.21 per month ($62.50 per year). If we assume the same 12,000 miles per year for the light trucks and vans, each vehicle would use about 686 gallons of fuel per year, resulting in an additional $7.15 per month ($85.75 per year) for light truck and van drivers in fuel taxes when fully phased in.
After considering the cost of maintaining and logging the receipts, this savings may evaporate and could actually cost your business more than the fuel taxes you are able to recover. But that is a decision each business must make.
Why should businesses consider allowing the state and local governments to keep the additional fuel taxes for road improvements?
Congestion means costly delays: One major Missouri manufacturer estimates each hour of delay in delivery of raw materials costs them $1 million. In today's just-in-time manufacturing environment, any delay can cost your operation dearly. When your employees or customers are tied up in traffic your business may miss opportunities or lose productivity. St. Louis, MO I-64/I-55 at I-44 is the 8th worst truck bottleneck in the nation, according to the American Transportation Research Institute.
Safety: Safety of your employees and customers traveling to and from your business is important to every business. Of course, the value cannot be estimated in dollars and cents.
Missouri Interstate bridge conditions: Of the 1,381 bridges on Missouri's Interstate system, five percent are considered in poor or structurally deficient condition making Missouri the tenth highest rate in the nation for poor bridges.
Vehicle repairs: Poor road conditions cost vehicle operators in front end alignments and other maintenance and repair costs.
Associated Industries of Missouri has fought hard to lower taxes on businesses in Missouri. We successfully eliminated the corporation franchise tax, lowered the corporate rate to one of the lowest in the nation, and reduced business income taxes for flow-through businesses and individuals.
While our first instinct is to work AGAINST tax increases, we wholeheartedly supported increasing the fuel tax to provide funding for transportation improvements. Why? We recognize the value provided to Missouri businesses from having a transportation system that is in good repair minimizes congestion and related downtime, and allows us to efficiently and safely move products and people on Missouri roads.
Please weigh all the factors before automatically requesting a refund of this additional revenue for transportation improvements.