An Open Letter to Governor Phil Bredesen: Provide State Gas Tax Relief for Drained Citizens of Tennessee

Dear Governor Bredesen:

On behalf of the more than 6,100 members of the National Taxpayers Union (NTU) in Tennessee, I urge you to take quick and decisive action to provide urgently needed motor fuel tax relief in your state. Given the ongoing price spikes associated with supply disruptions caused by Hurricane Katrina and record-setting gas costs that have been plaguing motorists for much of 2005, now is the time to use surplus state revenues generated in recent years by strong economic growth to cushion the blow.

NTU encourages you to permanently lower state gas tax rates or provide temporary relief through a ?gas tax holiday.? It is our belief that such a move would be the best solution available for assisting consumers in your state in this time of crisis. In light of a projected state budget surplus for fiscal year 2006, revenues ?lost? due to gas tax relief could be absorbed without fear of creating a fiscal imbalance.

Tennessee motorists pay one of the most oppressive gas tax rates in the country. According to the Federation of Tax Administrators, the state holds the dubious honor of having the 24th-highest state gas tax in the nation. When a customer pulls up to a gas station in your state, he or she pays 21.4 cents per gallon alone in state gas taxes. Combined with an 18.4 cent per gallon federal gas tax, this means Tennessee residents are paying over 39 cents per gallon just for taxes, or the equivalent of $5.97 on a 15-gallon fill-up. Additional local option taxes of 1 cent per gallon only add insult to injury for Tennessee consumers.

Tennessee hopes to collect $9.13 billion from taxpayers this year and is sitting on a steadily-fattening budget reserve of $260 million. Surely the state can afford to give back to overburdened motorists by suspending the gas tax until the end of the year. Although using budget reserves to fund new spending programs may be tempting, lowering state gas taxes immediately is a better way to assist Tennesseans as all taxpayers and aspects of your state?s economy are affected by rising gas prices. Your active leadership would ensure that beleaguered Tennessee motorists can better cope with this trying time.

We look forward to working with you on this important matter. Please feel free to contact us with any questions or if we can be of any assistance.


Kristina Rasmussen
Government Affairs Manager