An Act to replace the motor vehicle excise tax with a gas tax adjustment

194th Legislature (2025-2026) Introduced by Lindsay Sabadosa

Repeals motor vehicle excise tax; DOR sets per-gallon gas tax adjustment to match MVET revenue and distributes funds to municipalities, linking local funding to fuel use.

Overview

HD 4115 proposes repealing the motor vehicle excise tax (MVET) established in Chapter 60A and replacing the revenue mechanism with a per-gallon gas tax adjustment. The bill assigns responsibility to the Department of Revenue (DOR) to determine and distribute an adjustment to the gasoline tax rate so that the total revenue generated would match the revenue the MVET would have produced, had Chapter 60A been in effect.

Key Provisions

Section 1 – Repeal of MVET: Repeals Chapter 60A, eliminating the motor vehicle excise tax as a source of local revenue.

Section 2 – Gas tax adjustment mechanism (amending Chapter 64A, Section 3A):

Each municipality must submit to the DOR:
A comprehensive list of all vehicles registered within its jurisdiction.
A calculation of the revenue that would have been collected under Chapter 60A.
The Commissioner of Revenue uses this information, and any necessary forecasts, to calculate an adjustment to the state gas tax per gallon.
The goal of the adjustment is to collect the total estimated MVET revenue that would have been generated statewide under Chapter 60A.
The Commissioner then dispenses to each municipality the amount it would have collected had Chapter 60A been in effect.

How It Works (operational outline)

Data inputs: Municipal vehicle registration data and projected MVET revenue from Chapter 60A.

Calculation: DOR determines a per-gallon gas tax adjustment to achieve total MVET-equivalent revenue.

Distribution: DOR distributes to each municipality the amount corresponding to MVET revenue it would have received under the old system.

Administration: DOR administers the gas tax adjustment and revenue disbursement to municipalities.

Who/What Would Be Affected

Municipalities: Receive annual revenue equal to the MVET revenue they would have collected, adjusted through the per-gallon gas tax mechanism.

Vehicle Owners/Drivers: Subject to the gas tax adjustment as part of the state gas tax, rather than paying MVET per vehicle.

Massachusetts Department of Revenue: Central administrative role for calculating the per-gallon adjustment, forecasting, and distributing funds to municipalities.

State and Local Budgets: Municipal revenues become tied to gas tax receipts rather than MVET receipts; revenue stability depends on fuel consumption and prices.

Timeline & Procedural Notes

The bill text indicates a framework for calculation and distribution but does not specify concrete effective dates within the excerpt. As a 2025-2026 measure, it would require standard legislative progress, regulatory rules, and potential annual adjustment cycles handled by the DOR to align with fiscal planning.

Observations

The approach aims to maintain local revenue levels by converting MVET revenue into a statewide gas tax adjustment, with the state distributing funds to municipalities to mirror the MVET they would have collected.

The proposal inherently links municipal funding to fuel usage and price dynamics, introducing revenue variability relative to driving patterns and gasoline costs.

Bill