Tax On Gas Going Up In Arkansas As Legislation Goes Into Effect

Sep 30, 2019

Tuesday Arkansas will raise taxes on gas and diesel for the first time in 20 years.
Credit AAA

Starting Tuesday, taxes on gas and diesel fuel are going up and owners of electric and hybrid vehicles will be paying more to register their vehicles. Those increases are the result of legislation signed into law earlier this year by Gov. Asa Hutchinson.

The tax on gasoline is going up 3 cents a gallon, while the tax on diesel will rise 6 cents a gallon. In addition to those new taxes, owners of hybrid and electric vehicles will be paying $100 or $200 dollars more, respectively, to register their vehicles each year.

Scott Hardin, spokesman for the Arkansas Department of Finance and Administration, said the increased fees for hybrid and electric vehicles is expected to generate $2 million for the state's roads.

"It won't be a huge source of revenue, but it will help. We are definitely seeing more of those vehicles registered," Hardin said.

Collecting revenue from the state's casinos was also part of the funding bill, Act 416, which included the gas tax and fee increases. The state expects all of those funding sources to add $95 million to the budget for road and infrastructure maintenance.

Danny Straessle with the Arkansas Department of Transportation says the new taxes will help pay for road and bridge maintenance, but not new construction.

"The money that's generated from the taxes on the wholesale price of gas and diesel will be used strictly for what we call system preservation, basically taking care of what we've got," Straessle said.

Steve Schone with AAA says Arkansas will still have one of the lowest gas prices across the nation.

"Arkansas has very, very inexpensive gasoline relative to the country," Schone said. "Part of that is in the gas taxes. It has the 11th lowest gas tax in the country, so that contributes greatly to that overall cost relative to other states."

According to the American Society of Civil Engineers more than a dozen other states enacted gas tax increases earlier this year. This is Arkansas's first fuel tax increase since 1999.