The proposed legislation appeared worthwhile: Stop illegal bootlegging of gasoline into Utah and reap an extra $5 million in tax revenue.

But then lawmakers and industry officials asked supporters of the measure this week for evidence of the alleged bootlegging.And Utah Department of Transportation chief Eugene Findlay and State Tax Commission chairman Roger Tew didn't have a shred.

"You are talking about 3,300 tankers coming in here with illegal gasoline and not one has been caught. Not even one," asked Rep. David Ostler, R-Salt Lake. "What the hell is going on here."

With that, the Transportation and Public Safety Interim Committee tabled the bill, and gasoline industry officials breathed a sigh of relief and left.

The bill would have moved collection of Utah's motor fuels tax from the wholesale level - refineries and distributors - to the retail level - dealers or service station operators. The bill would have had no impact on gasoline prices.

Tew said no other state collects fuel tax from dealers, and he didn't have an estimate of what it would cost the state to audit a few thousand dealers verses a few hundred wholesalers and refineries.

Service station representatives complained that the added hassle of collecting the fuel tax would mean more expense. "You are asking the people least able to pay the tax," said Glade Sowards, former lawmaker and now lobbyist for the Western Petroleum Marketers Association.

But Tew explained most service stations already collect taxes on food items and have the capacity to do the same for fuel. Furthermore, astute retailers could see it as an opportunity earn some interest on the collected tax before submitting it to the state.

The industry appeared a bit incensed, however, about the portrayal of a widespread bootlegging problem. Findlay explained that distributors will buy gasoline out of state, where the tax is lower, and smuggle it into Utah. The distributor then sells the bootlegged fuel at the Utah market price and pockets the difference between the out-of-state tax and the 19-cent-per-gallon tax charged to refiners in Utah.

The Tax Commission said each tanker represents $1,800 in fuel tax, which means about 3,000 tankers trucks dodge ports-of-entry and bring illegal gasoline into Utah each year.

But, despite the large numbers, no one has been caught. The state has monitored ports-of-entry and audited local service stations only to come up with nothing to prove the bootlegging rumors.

"If the problem is as big as they claim, it would skew the market place. A few cents can make a big difference," said Jim Peacock, executive director of the Utah Petroleum Association.

Peacock and Sowards said if there is a problem it should be stopped. But they want to be included on drafting a solution. Both claimed to not have been notified about meetings when a committee task force considered the bill.

Findlay agreed, saying the task force was simply a first step and industry input was planned. But whether that will take place before the upcoming legislative session is uncertain.

"We will keep working on it, but I don't know if something will come up this session," Findlay said.


(additional information)

Proposed fee increases

Measures approved by the Legislature's Transportation and Public Safety Interim Committee:

DRIVER LICENSE FEES - Proposal increases fee for regular, provisional, motorcycle and taxicab driver's licenses by $5. Renewals or extensions for people 65 years and older would go up $2. That would raise the regular driver's license fee from $10 to $15.

TITLE CERTIFICATE and duplicate registration - A proposed fee increase from $2 to $4 for transferring registration from one vehicle to another and issuing a certificate of title. Fees also would double for duplicating or replacing registrations, certificates of title and license plates.

Lawmakers said the increased fee revenue will go toward covering administering costs of these services.