Historically, state and local governments and the U.S. federal government have reciprocally exempted each other from paying excise and other taxes. The Government Finance Officers Association (GFOA) has long supported the immunity of state and local governments from taxation by the federal government. As an example, under current law the federal government taxes fuel consumption, truck and tire sales, and highway use of non-governmental users. Respecting this long-standing doctrine of reciprocal tax immunity, state and local governments and the federal government do not levy gasoline or road use taxes on each other. This relationship was reaffirmed by the continued exemption of state and local governments from the federal fuel excise tax in 1988.

Proposals are periodically made to enact new taxes that would apply to state and local governments. GFOA endorses the doctrine of reciprocal tax immunity and opposes the imposition of new taxes in any form upon state and local governments.

• Publication date: May 1993