Assembly roads plan would apply sales tax to gasoline (UPDATE)

By Scott Bauer, Associated Press

MADISON, Wis. (AP) — Assembly Republicans releaesd a complex and far-reaching road-funding proposal Thursday that would cut gas taxes in Wisconsin, apply the sales tax to fuel purchases, put a new fee on hybrid vehicles and lower income taxes with the hope of moving to a flat tax.

Assembly Speaker Robin Vos, speaking with dozens of fellow Republicans standing behind him in support, called the plan a “new starting point” for negotiations with Gov. Scott Walker and Senate Republicans.

“Is this perfect for anybody?” said Rep. Dale Kooyenga, the primary architect of the plan. “Is this like a Utopian plan for transportation or income taxes? No. But we’re Wisconsinites, we get along with our neighbors, we understand how to compromise and we move forward as a team.”

The myriad changes are unlikely to result in the price at the pump changing much from what it is now, but no one can say for certain what exactly will happen, Kooyenga said.

Finding a remedy for a projected $1 billion shortfall in the state’s transportation budget  is proving to be the most vexing roadblock facing the Republican-controlled Legislature as it works on passing a $76 billion state budget.

Walker’s proposal was to delay various projects and borrow $500 million. The Assembly GOP plan would instead raise $660 million in new revenue, part of which would be used to reduce the state’s borrowing by $300 million. The plan would also put off any decisions about which roads projects should take priority and it would not take money from the state’s main account to pay for roads, an approach Senate Majority Leader Scott Fitzgerald and Walker have both said they are examining and would support.

Fitzgerald said in a statement that the plan “contains a number of good ideas that are worth a closer look.” Jack Jablonski, a spokesman for Walker, said the governor was reviewing the plan.

Democrats said the plan’s tax changes would hurt both workers and businesses.

“Instead of focusing on a solution, Republicans have proposed even more ways to make workers and businesses pay for their lack of leadership,” said Democratic Rep. Katrina Shankland, a member of the state’s budget-writing committee.

The conservative group Americans for Prosperity praised the plan’s move toward a flat income tax, calling the total proposal “worthy of consideration.”

The Assembly GOP plan would:

• eliminate a host of income tax credits to move toward a 3.95 percent flat tax for all taxpayers by 2028. Income taxes currently range from 4 percent to 7.65 percent, depending on how much a person earns. Critics of the flat tax say it would benefit the wealthy, who would pay a smaller percentage of their income in taxes than people who earn less. Supporters say it would simplify the tax system and encourage people to earn more because they wouldn’t be penalized by higher taxes in the upper brackets. The tax credits targeted for elimination include the marriage credit, the itemized-deduction credit, a credit for people renting houses or apartments, the alternative minimum tax, an internet access tax and the first-dollar credit used to reduce property taxes.
•  lower from 9.18 percent to 3 percent the state’s minimum markup applied to gas. The minimum markup law prohibits gas from being sold at a price below what it costs a retailer to purchase.
• apply the state’s 5 percent sales tax to fuel purchases while also lowering the state’s 32.9-cent-per-gallon gas tax by 4.8 cents a gallon.
• repeal prevailing-wage requirements for state-commissioned public projects. Two years ago, lawmakers had eliminated these requirements for local projects.
• eliminate 180 positions for engineers at the Wisconsin Department of Transportation.
• forbid local governments to impose new wheel taxes, although those in place before April would be allowed to continue.
• allow local governments to increase local sales taxes by half a cent to pay for transportation projects.
•  set up a system for approving toll roads – a proposal that couldn’t move forward without the federal government’s approval.
•  require local approval of any new roundabout.
• impose a new $30 fee on hybrid vehicles and a $125 fee on electric cars, raising nearly $5 million over two years.