Politics & Government

Senators approve tribal fuel tax plan

The state could enter into agreements with tribes to allow continued collection of the state gasoline tax on the tribes' reservations under a measure passed by the Senate Tuesday.

The measure passed on a 34-14 vote, with one lawmaker excused. It now heads to the House.

The measure is in response to a 2005 U.S. District Court ruling that upheld tribal sovereignty over taxation and opened the door for all tribal retailers to avoid the state fuel tax of 34 cents a gallon. The bill would rework state gasoline tax statutes to ensure that tribes continue collecting the state tax, which will increase to 36 cents per gallon next year.

The bill would allow the revenue to be shared by the state and tribes per compact. State gasoline taxes are used for road projects.

The measure was passed by the Senate last year, but got stopped up in the House.

If all 15 tribes with gasoline stations had decided not to collect the tax, the state could have faced millions annually in revenue shortfalls. Such a move also would have allowed tribal gasoline stations to significantly undercut prices at nontribal stations.

Last year, two tribes, the Swinomish and Squaxin Island, negotiated a revenue-sharing agreement with the state to allow continued collection.

The bill allows the state to negotiate compacts with the state's on a case by case basis.

The state has similar compacts for liquor and cigarette taxation.