House Democrats seek tax hikes on gas, vehicle purchases

Minnesota House Democrats will push for tax increases on gas, vehicle purchases and registration tabs before the end of the 2021 session.

The Democrats' proposal unveiled Tuesday would raise $627 million for transportation. Republicans who control the Senate have vowed to block any tax increases this year.

The House proposal would raise Minnesota's gas tax by 5 cents over the next four years, to 33.6 cents in 2024. It is smaller than the 20 cent per gallon increase that legislative Democrats and Gov. Tim Walz unsuccessfully sought in 2019.

"Those are...huge concessions that we have made in an attempt to reach across the aisle, in an attempt to make some sort of progress with the Senate to move forward," House Transportation Chair Frank Hornstein, DFL-Minneapolis, said.  ​

The House's proposal would also:

  • Raise the state's tax on vehicle purchases to 6.875 percent. It is currently 6.5 percent
  • Raise the state's surcharge on luxury vehicles -- defined as those costing more than double the average new car price -- to 1.785 percent, up from 1.285 percent
  • Increase yearly registration fees by slowing the state's vehicle depreciation schedule, which is how tab fees are calculated

Senate Transportation Chair Scott Newman reacted by criticizing the House bill. The proposal is "a new tax on you," Newman, R-Hutchinson, said in a video statement.

​Minnesota's current 28.6 cent per gallon gas tax ranks 24th among states, according to data from the American Petroleum Institute. The proposed increase would move the state to 18th.

The House proposal would fund a series of new projects around the state, including $6.2 million for planning and design work of a two-mile land bridge over Interstate 94 in St. Paul.

The bridge would reconnect the Rondo neighborhood between Lexington Parkway and Rice Street. Freeway planners of the 1950s and 60s chose a routing for I-94 that tore through the predominantly Black neighborhood.