The City of Whitehorse is pondering whether to ask the Yukon government to raise taxes on gasoline and diesel fuel by one cent per litre to generate $1 million annually for Yukon communities.

A proposal to see support for such a request from the Association of Yukon Communities (AYC) was before city council for discussion Monday night, and will be back for a vote next week.

The additional revenue would be shared among the Yukon communities. Whitehorse would direct its share toward municipal transit services, and the communities using it for road improvements.

"It would be a fairly large number that would be distributed across all municipalities," Rob Fendrick, the city's director of administrative services, explained to council.

Fendrick told council there are several examples in other areas of Canada where this type of tax authority is exercised by municipal governments.

In the Yukon, and for the most part across Canada, municipal governments are limited to raising money through property taxes and service fees.

Hiking the gasoline tax would require the participation of the Yukon government.

Each year at the AYC's annual spring meeting, municipal councils across the territory bring forward motions to seek general support from other municipalities for a variety of initiatives.

Coun. Florence Roberts, the councillor behind the fuel tax proposal, said in an interview that implementing such a tax is a means of encouraging more use of public transit and less use of personal vehicles.

It's also a means of having the territory's rubber-tire tourism industry contribute directly to transportation infrastructure across the Yukon, she said.

Premier Dennis Fentie flatly rejected the notion in an interview this morning.

"First of all, I do not preclude in any way, and quite respect the right of the municipalities to have these kinds of discussions, and to bring forward these kinds of initiatives," said Fentie, who also serves as Finance minister.

"That said, the government will not raise the gas tax."

Fentie said the government does recognize the challenges the municipalities are facing, and has assisted by raising its annual grants to the municipalities.

It's why the municipalities get the lion's share of funding from the new federal gas tax program, and why the Yukon government is working through a variety of federal programs to direct infrastructure money to municipalities, he said.

The motion for an additional one cent of tax on gasoline and diesel fuel - but not home heating fuel - comes as the City of Whitehorse just raised property taxes by 7.5 per cent, along with several increases in service fees.

City hall has also suggested it will need to continue hiking property taxes for the foreseeable future, to keep up with growth and rising costs. It has proposed four-per-cent increases for each of the next two years, meaning taxes will have been boosted by 15.5 per cent in just three years.

As background information, it was pointed out to council that the Yukon government currently earns $3.7 million through the 6.2 cents in territorial taxes on every litre of gasoline sold.

Adding one cent a litre, representing a 16-per-cent tax increase, would generate $594,003 for municipalities, the information indicates.

The government currently earns $2.7 million in taxes through the 7.2 cents a litre it collects for every litre of diesel fuel. Adding one cent a litre, representing a 14-per-cent increase in territorial taxes, would generate $397,857 for municipalities.

Combined, the hike in gasoline and diesel fuel taxes would generate $991,860 annually for improvements in city transit community roads.