Governor Haslam announces gas tax increase

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MEMPHIS, Tenn. -- Timothy Alexander is passionate about the price he pays at the pump.

When we found him filling up his car at a North Memphis gas station, he didn't think much of Governor Bill Haslam's proposed 7 cent gas tax increase.

"I think it`s ridiculous, sir. I think it`s ridiculous. Already too high as it is," he said.

On Wednesday, the governor announced a plan that would effectively clear a huge $10 billion backlog of road projects across the state. In order to do that, he's having to make some changes to your taxes.

"What we are trying to do is address some infrastructure needs and not be burdensome to our average citizen," the governor said. "To our average citizen it will cost about four dollars a month. We tried to balance that with $270 million in tax cuts."

state-taxTaxpayers can now expect an additional $5 fee when renewing car tags, an additional three percent tax when renting a rental car, and, most notably for Alexander, an increase in the gas tax by 7 cents per gallon for unleaded. Diesel fuel will see an additional 12 cents per gallon of gas.

It would be the first gas tax increase in almost 30 years.

Right now, Tennesseans pay a 21.4 cents per gallon tax.

"The small things make a big difference, and so the taxes `bout to increase that small cent making a big difference," said one Tennessee resident WREG spoke to.

Using numbers provided by TDOT, WREG calculated that 7 cent increase would generate approximately $221 million in tax revenue.

The good news for consumers-- Haslam also wants to cut grocery tax by one half a percent to 4.5 percent and cut the hall income tax 1.5 percent.

Tennessee Senator Lee Harris released a statement saying, "While we are waiting to receive more details...the Governor's remarks about infrastructure and public transit are initially encouraging. I am also initially encouraged by the cut to grocery taxes..."