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Motor Fuel Tax

Oklahoma has relatively low gas taxes. The motor fuel tax is a selective sales tax that tries to match payment for a service – transportation – with the benefit of the service. The Oklahoma tax on gasoline is four cents per gallon below the national average reported by the Federation of Tax Administrators. This tax provides 3percent of all tax revenue in the state. The tax is among the slowest-growing in Oklahoma, increasing just 1 percent per year.

Advantages of this tax include:

  • There is a clear connection between tax and benefit since much of the tax is used for road construction and maintenance;
  • The tax can encourage conservation, since it is on a per-gallon basis; and
  • Some of the tax is paid by nonresidents who travel through or use goods transported through the state.

Disadvantages are:

  • Tax revenue falls when gas prices are increasing because people use less fuel; and
  • The tax has not proven adequate to fund the maintenance of safe roads and bridges.

Oklahoma first levied a gas tax in 1933; the last increase was in 1987. Oklahoma levies excise taxes on gasoline at 17 cents per gallon and diesel at 14 cents. Fuel used by governments and Indian tribes is exempt and farm users may have the tax refunded. The general sales tax does not apply to gasoline. Tribes may compact with the state to receive part of the fuel tax collections.

This tax is collected by wholesale fuel vendors and paid to the Oklahoma Tax Commission. The tax then is included in the price paid at the pump. Nearly two-thirds of the amount collected goes to the state transportation fund for appropriation to the Oklahoma Department of Transportation. About one-third goes to local governments for roads and bridges. Small amounts are restricted for other forms of transportation. None goes to the state’s General Revenue Fund. Unlike many states, local governments may not levy their own gas tax.

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