Supreme Court gives Alabama chance to justify diesel tax on railroads

Industrials Associated Press

The Supreme Court says Alabama should have the chance to justify a fuel sales tax that it assesses on railroads but not on competitors in the trucking and barge industries.

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The justices on Wednesday ruled 7-2 against CSX Transportation Inc., which had challenged the state's assessment of a 4 percent sales tax whenever the company purchased diesel fuel.

The railroad company argued that the tax was illegal under a federal law barring taxes that discriminate against railroads. Alabama officials said the tax system was fair because truckers already pay a different 19-cent per gallon tax on diesel fuel.

A federal appeals court ruled in favor of CSX, but the Supreme Court reversed. Justice Antonin Scalia said the appeals court was wrong in refusing to consider Alabama's justification.