Ending tax break for “red dye” diesel for farmers under consideration
October 29th, 2013 by Ric Hanson
Ending a tax break on the diesel fuel farmers and construction companies use in off-road vehicles is among the ideas the Iowa D-O-T’s director has developed for increasing the state budget for road construction and maintenance. Governor Terry Branstad says some of the options are “outside the box.” “They’re different and we would expect that some of them would be somewhat controversial,” Branstad says. “We are saying, ‘Let’s see how the public feels about it.'” However, the Iowa D-O-T’s director isn’t releasing his list to the public, but instead sharing it first with legislators and interest groups, like the highway construction industry.
“I think this is a good process and I’ve indicated I’m not endorsing any of these options, but my hope is we can look at all these different options and alternatives and see if a consensus can be built that would eventually gain bipartisan support in the legislature, both the House and the Senate, to address the issue of funding fot the Road Use Tax Fund.” Diesel fuel sold with a red dye is to be used in off-road vehicles like tractors and excavators. It is not subject to state taxes, an estimated 38-million dollar annual tax break for farmers and the construction industry.
The D-O-T director’s list suggests that money could be placed in a new account to finance road projects in rural areas of the state. The only other idea on the D-O-T’s list that would bring in more tax money would be increasing the state sales tax on vehicle purchases — meaning car and truck buyers would pay 60-million more dollars in registration fees.