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Missouri raises gas tax: How can drivers get refunds? 

Missouri’s first motor fuel tax increase in more than 20 years takes effect on Oct. 1, but Missourians seeking to keep that money in their pockets can apply for a rebate program.

The state will incrementally increase the gas tax by 2.5 cents annually, with the funds earmarked for road and bridge repairs. Once fully implemented in 2025, the tax increase is expected to generate about $375 million additionally per year for state highways and an additional $138 million per year for city and county transportation needs, according to estimates. 

The bill, a passion project for Senate President Pro Tem Dave Schatz, included a rebate program inspired by a similar policy enacted in South Carolina. 

Taxpayers driving vehicles weighing less than 26,000 pounds can submit a written statement and fill out a form drafted by the Department of Revenue with data on the number of gallons purchased, information on the seller, and details on the vehicle. The department hopes to have a final version of the form ready by the start of the next fiscal year. 

Refund applications must be submitted between July 1 and Sept. 30.

The department has 45 days to process the submission before having to pay the taxpayer interest, and the department may pursue an investigation before approving applications. Drivers are encouraged to save their receipts to back up their applications in case of an audit. 

“We spoke with the legislators in South Carolina who got it across the finish line with bipartisan support and thought it was a creative way to get it through,” Schatz told The Missouri Times. “The reality of this is the people who don’t support it have the opportunity to get it returned, it’s no bait-and-switch. Lots of people, when they see how small an impact the tax really has on their wallets, will go ahead and keep their investment in the state’s infrastructure intact.”

Schatz said South Carolina initially saw a 15 percent redemption rate, so Missouri’s tax hike was set at a rate to withstand a 25 percent redemption rate without altering planned investments. Schatz noted the rebate program doesn’t apply to large trucks or out-of-state vehicles, creating a large population that wouldn’t have the option to opt-out of the tax. 

“At the end of the day, it’s a small price to pay to improve the roads and bridges they’re driving on,” Schatz said.

The bill saw bipartisan support in both chambers, with House Transportation Committee Chair Becky Ruth spearheading the effort in the lower chamber. Ruth, who proposed the program as part of her own version of a tax increase this session, said a rebate was vital for taxpayers who were wary of the increase. 

“This money, per the constitution, goes directly into our road fund,“ Ruth previously said. “We wanted to make this fair for all people. If you do not want to pay those taxes, you have the option of getting that rebate and taking your money back. With this bill, the people get to vote every single year.” 

Not everyone in the legislature was on board with the increase: Sen. Bill Eigel opposed the measure and questioned its purpose during its time in the upper chamber.

“The government here in Jefferson City has never had more money,” Eigel said. “Our balances have never been bigger in the state of Missouri: Our general fund balance is at a record level, our state budget is at a record level, our support from the federal government is at record levels. Any contention that there’s a part of that government in Jefferson City that doesn’t have enough money seems woefully out-of-touch.”

The bill was signed by Gov. Mike Parson in July. Parson, a fellow Republican, has continuously prioritized the state’s transportation infrastructure since taking office: He initiated a Focus on Bridges program that earmarked more than $50 million to bridge replacement initiatives last year and has emphasized the gas tax increase 

Similar tax increases were proposed on the ballot in 2014 and 2018, but neither passed. This was the first session the rebate program was attached to the bill.