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CRS History of Excise Tax on Gasoline

SEP. 8, 1999

RL30304

DATED SEP. 8, 1999
DOCUMENT ATTRIBUTES
  • Authors
    Talley, Louis Alan
  • Institutional Authors
    Congressional Research Service
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    excise taxes
    Highway Trust Fund
    gasoline tax
  • Industry Groups
    Transportation
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 1999-30292 (14 original pages)
  • Tax Analysts Electronic Citation
    1999 TNT 180-17
Citations: RL30304

                       CRS REPORT FOR CONGRESS

 

 

                          September 8, 1999

 

 

                          Louis Alan Talley

 

                    Research Analyst in Taxation

 

                   Government and Finance Division

 

 

                              ABSTRACT

 

 

With the establishment of the Highway Trust Fund in 1956, gasoline

 

revenues were dedicated to building the Interstate Highway System. A

 

portion of the tax was returned to the role it served as a General

 

Fund revenue raiser with passage of the Omnibus Budget Reconciliation

 

Act of 1990. However, a part of the Taxpayer Relief Act of 1997

 

provided that all of the tax be designated as a funding source for

 

the Highway Trust Fund. The passage of the Transportation Equity Act

 

of the 21' Century (P.L. 105-178) extends a portion of the gas tax

 

until September 30, 2005. This report will be updated as warranted by

 

future legislative developments.

 

 

             THE FEDERAL EXCISE TAX ON GASOLINE AND THE

 

                 HIGHWAY TRUST FUND: A SHORT HISTORY

 

 

SUMMARY

 

 

[1] Excise taxes have long been a part of our country's revenue history. In the field of gasoline taxation, the states led the way with Oregon enacting the first tax on motor fuels in 1919. By 1932, all states and the District of Columbia had followed suit with tax rates that ranged between two and seven cents per gallon. The federal government first imposed its excise tax on gasoline at a one cent per gallon rate in 1932. The gas tax was enacted to correct a federal budgetary imbalance.

[2] Economists know the gasoline excise tax as a "manufacturer's excise tax" because the government imposes it at production (i.e., the producer, refiner, or importer) for efficiency in collection. Economists think the tax is generally passed forward to the retailer translating into a higher retail gas sales price. Thus, the consumer ultimately pays the tax. Revenues collected from the federal tax on gasoline support the Highway Trust Fund and the Leaking Underground Storage Tank Trust Fund. All but 0.1 cent of the revenues supports the Highway Trust Fund. The Treasury Department transfers collections from the Highway Trust Fund to other trust funds dependent on the ultimate use of the gasoline.

[3] The Highway Revenue Act of 1956 established the federal Highway Trust Fund for the direct purpose of funding the construction of an Interstate System, and aiding in the finance of primary, secondary and urban routes. This Act increased the tax on gasoline from two to three cents per gallon. Each time the Congress has extended the Highway Trust Fund it has also extended the federal excise tax on gasoline.

[4] Expenditures have diverged three times since the establishment of the Highway Trust Fund. First, in 1982, a Mass Transit Account was established within the Highway Trust Fund for capital and operating expenditures made under the Urban Mass Transportation Act of 1964. Under current law, revenues equivalent to 2.85 cents per gallon of the gasoline tax go into this Mass Transit Account. The second change provides an additional federal excise tax of 0.1 cent per gallon imposed on all motor fuels to finance the Leaking Underground Storage Tank Trust Fund (LUST). Monies from this fund help pay the cost of cleanup of underground storage tanks that leak petroleum products. The LUST tax has expired twice and is now reinstated for the period October 1, 1997, through March 31, 2005. A third change, part of the 1990 reconciliation process, dedicated some federal gasoline excise tax revenue for deficit reduction purposes. Thus, some federal excise tax collections from gasoline went to the General Fund for deficit reduction during the period December 1, 1990, through September 30, 1997. The Taxpayer Relief Act of 1997 (P.L. 105-34) altered the disposition of revenues such that monies previously used for deficit reduction will again accrue to the Highway Trust Fund. While the former deficit reduction component of the federal gasoline tax continues without an expiration date, the 14 cents tax scheduled to expire on September 30, 1999 has been extended through September 30, 2005. The legislative vehicle for this extension is the Transportation Equity Act for the 21st Century (P.L. 105-178) generally known as TEA21.

CONTENTS

 

 

Gasoline Excise Tax For Deficit Reduction - 1932

 

National Defense Requirements

 

Highway Trust Fund

 

Gasoline Excise Tax for Deficit Reduction

 

Reversion from Deficit Reduction to User Tax Status

 

 

LIST OF TABLES

 

 

Table 1. Summary of Changes in the Rate of the Federal Manufacturers'

 

Excise Tax on Gasoline

 

 

             THE FEDERAL EXCISE TAX ON GASOLINE AND THE

 

                 HIGHWAY TRUST FUND: A SHORT HISTORY

 

 

[5] While excise taxes have long been a source of federal tax revenue, the federal manufacturers excise tax on gasoline was first made a part of the federal tax structure by the Revenue Act of 1932, that became law on June 6, 1932. A manufacturer's excise tax is one that is collected at the level of production. A tax imposed at the production or importation level provides ease in administration and revenue collection.

[6] Prior to the 1932 Act, there had been a reluctance on the part of federal officials and Congress to impose this tax at the federal level. Instead, they preferred to relinquish this revenue source to the states to help them finance their revenue needs. Oregon was the first state to levy a gasoline tax in 1919. As of January 1932, all of the states and the District of Columbia had enacted legislation imposing a tax on gasoline with rates that ranged from two to seven cents per gallon.

[7] However, during the severe depression of the 1930s, federal revenues were sharply reduced and higher expenditures were made for relief and public work programs. As a result, the Secretary of the Treasury, in his Annual Report for the fiscal year 1931, reported that the federal government had incurred a budgetary deficit of some $903 million that year. This marked the first year in more than a decade when federal receipts failed to exceed federal expenditures and produce a budgetary surplus. Moreover, the Secretary of the Treasury estimated then that even higher deficits were anticipated in the years immediately following: $2.1 billion in the fiscal 1932, and $1.4 billion in the fiscal year 1933.

GASOLINE EXCISE TAX FOR DEFICIT REDUCTION -- 1932

[8] To correct this budgetary imbalance, the Secretary of the Treasury submitted comprehensive tax-raising and expenditure- reduction proposals for congressional action. Among the tax recommendations were those for legislation increasing individual and corporation income, estate and gift, excise, and other taxes. Included in the excise tax proposals was the request for a new federal manufacturers excise tax on gasoline, to be levied at the rate of one cent a gallon and scheduled to end in 1934. It was estimated that adoption of such a tax would yield the U.S. Treasury approximately $165 million in revenues during fiscal year 1933.

[9] The House of Representatives, in its consideration of and action on these revenue-raising proposals, initially refused a new federal tax on gasoline. However, the Senate amended the House-passed bill, authorizing a gasoline tax at the rate of one cent per gallon. They retained the tax in the final version of the bill approved by the House and Senate Conference Committee and signed into law.

[10] As finally approved, Section 617(a) of the Revenue Act of 1932 1 imposed a federal tax on gasoline sold by a producer or importer at the rate of one cent per gallon. Under Section 617(c) of this legislation, the term "producer" included a "refiner, compounder, or blender, and a dealer selling gasoline exclusively to producers of gasoline, as well as a producer." Gasoline was defined to include gasoline, benzol, and any other liquids used primarily as a fuel to propel motor vehicles, motor boats, or airplanes. Section 629 of this Act made this tax effective on June 21, 1932, for a temporary period, with provision for its end just over a year later on June 30, 1933. The Annual Report of the Commissioner of Internal Revenue for fiscal year 1933, reported that the federal government derived $124.9 million from the excise tax on gasoline. Thus, the gasoline tax represented 7.7 percent of the total Internal Revenue collection of $1.620 billion derived from all sources during fiscal year 1933.

[11] Shortly before the tax was scheduled to expire, Congress enacted two bills into law that extended this tax for an additional year and increased its rate. Under Public Law 73 approved by the 73rd Congress, 2 they extended this tax until June 30, 1934. The National Industrial Recovery Act, 3 signed into law on the same day, included provisions government the rate of this tax. Section 211(a) of this Act authorized the increase in federal gasoline tax from one cent to one and one-half cents per gallon, effective June 17, 1933. Section 217(b) provided that this tax is reduced to one cent per gallon on the first day of the calendar year following the date proclaimed by the President when either of the following occurred first: 1) the close of the first fiscal year ending after 1933 when total federal receipts exceeded total federal expenditures, or 2) the 18th amendment to the Constitution, establishing national prohibition, was repealed (which would bring in additional revenues to the federal treasury from alcohol taxes).

[12] Subsequently, President Franklin D. Roosevelt proclaimed repeal of the 18th amendment to the Constitution on December 5, 1933. Therefore, under authority of Section 217(b) of the National Industrial Recovery Act, the federal gasoline tax reverted to its former rate of one cent per gallon on January 1, 1934.

[13] Section 603 of the Revenue Act of 1934, 4 approved in the spring of 1934, continued this tax at the rate of one cent per gallon beyond its scheduled expiration date of June 30, 1934.

NATIONAL DEFENSE REQUIREMENTS

[14] The one-cent rate was maintained until just before the United States entered World War II when as a result of increased national defense requirements, Congress again took action increasing this tax. Section 210 of the Revenue Act of 1940 5 authorized an increase to one and one-half cents per gallon for the five-year period beginning on July 1, 1940, and continuing through June 30, 1945, as part of a defense tax.

[15] The following year, under Section 521(a)(20) of the Revenue Act of 1941, 6 this rate was made permanent by elimination of the June 30, 1945, expiration date that had been specified in the Revenue Act of 1940.

[16] The one and one-half cents per gallon rate continued for more than a decade until the outbreak of the Korean War, when the Congress increased the rate to two cents per gallon under authority of Section 489 of the Revenue Act of 1951. 7 This rate became effective on November 1, 1951, and Congress authorized it to continue until March 31, 1954. After this date, Congress scheduled the rate to be reduced to its former rate of one and one-half cents per gallon.

[17] Before this reduction took place, Congress passed the Excise Tax Reduction Act of 1954, 8 and under Section 601(a)(6) of this legislation, the two-cents-per-gallon rate was extended for an additional year -- until March 31, 1955.

[18] During the next two years Congress passed legislation granting one year extensions of the two-cents-per-gallon tax on gasoline by approval of the Tax Rate Extension Act of 1955 9 [Section 3(a)(3)] and the Tax Rate Extension Act of 1956 10 [Section 3(a)(3)], which continued the rate first to March 31, 1956, and then to March 31, 1957.

[19] Public Law 466, enacted by the 84th Congress, 11 provided that the Treasury Department refund those taxes paid on gasoline used on farms for farming purposes purchased after December 31, 1955.

HIGHWAY TRUST FUND

[20] The Federal-Aid Highway Act of 1956 12 provided for a significant expansion in the federal-aid highway program and authorized federal funding over a longer period to permit long-range planning. It was considered necessary to authorize the entire Interstate Highway program to assure orderly planning and completion of this network of highways throughout the United States as efficiently and as economically as possible. Consequently, this Act authorized appropriations for the thirteen-year period from fiscal year 1957 through 1969 for this system. To make the federal-aid highway program self-financing, the Highway Revenue Act of 1956 13 was incorporated as Title II of this legislation that imposed new taxes and increased others levied on highway users who directly benefitted from this program.

[21] Section 205 of this Highway Revenue Act authorized an increase in the federal gasoline tax from two to three cents per gallon for the sixteen-year period from July 1, 1956, through June 30, 1972. After that, the Congress scheduled the tax to be reduced to one and one-half cents per gallon.

[22] Section 209 of this Act authorized the creation of the Highway Trust Fund to which there was to be appropriated from the General Fund of the Treasury certain percentages of receipts derived from highway-user taxes: gasoline, diesel and special motor fuel, tread rubber, tires and inner tubes, 14 trucks, buses, etc. One hundred percent of the federal gasoline tax receipts was transferred to the Highway Trust Fund.

[23] It was argued that transferring such taxes to the Highway Trust Fund was necessary to cover anticipated expenditures to be made under the federal-aid highway program for the sixteen-year period from fiscal year 1957 through 1972. House Report 2022 (84th Congress), issued on this legislation, estimated that highway-user taxes would yield some $38.5 billion in revenues for this trust fund during this sixteen-year period -- enough to cover anticipated expenditures (during this same period) for the federal-aid highway program of approximately $37.3 billion.

[24] This legislation also arranged for refunding a certain portion of federal gasoline taxes paid that were used for nonhighway purposes or by local transit systems.

[25] Since enactment of this legislation, Congress has continued to pass laws extending the life of the Highway Trust Fund and extending and increasing the rates imposed on gasoline.

[26] Under Section 201(a) of the Federal-Aid Highway Act of 1959, 15 the federal gasoline tax was increased from three to four cents per gallon which was to be in effect from October 1, 1959, through June 30, 1961.

[27] Under Section 201(b) of the Federal-Aid Highway Act of 1961 16 this four-cent rate was extended beyond June 30, 1961, and the scheduled reduction to one and one-half cents per gallon, which the Highway Revenue Act of 1956 had authorized to take place on July 1, 1972, was deferred until October 1, 1972.

[28] Following the 1961 Act, the next law affecting the federal gasoline tax was the Federal-Aid Highway Act of 1970. 17 Under Section 303(a)(6) of this Act, the scheduled reduction in the rate of this tax to one and one-half cents per gallon was deferred from September 30, 1972, to September 30, 1977.

[29] Again in 1976, an extension of excise tax rates without the scheduled rate reductions allocated to the Highway Trust Fund was provided in Title III of the Federal Aid Highway Act of 1976. 18 The Interstate Highway System was obviously not going to be completed in 1977 (it was estimated in 1976 that it might be completed in 1988). Lack of time to study and report to Congress on modifications to the Highway Trust Fund led to the two-year extension. The Congress was concerned that without this legislation, they would interrupt funding. Thus, the Congress merely delayed decision-making until they could gather additional information.

[30] Two years later, they announced that they had not yet reached conclusions for modifications to the Trust Fund and its related taxes. The Ways and Means Committee accepted the recommendation of the Public Works Committee and approved an extension of the Trust Fund and the taxes payable to the Fund. This five-year extension through September 30, 1984, became part of the Surface Transportation Assistance Act of 1978. 19

[31] Congress gathered extensive information on highway finance and related taxes in 1992. Two major studies were submitted to Congress. The first was a cost allocation study done by the Department of Transportation in May 1982. The second was a study of the excise tax structure that the Department of the Treasury provided to the Congress in December 1982. Further, the Congress held more than a dozen hearings before the passage of the Surface Transportation Assistance Act of 1982. 20

[32] The Act contains what is commonly called the 4R Program: interstate reconstruction, resurfacing, restoration, and rehabilitation. The completion and selective expansion of the Interstate Highway System remained the primary goals under the bill. Congress raised the gasoline excise tax from its previous level of 4 cents per gallon to 9 cents per gallon. With this increase, they eliminated some highway user charges while increasing others. The Act also provided that one cent of the 5-cent increase in the motor fuel taxes was to be allocated for mass transit purposes. In addition, the bill set up a special Mass Transit Account for expenditures made under the Urban Mass Transportation Act of 1964.

[33] In 1986, in response to concerns for the cost of the cleanup of leaking underground storage tanks containing petroleum products, Congress established the Leaking Underground Storage Tank Trust Fund. 21 This fund receives revenues of 0.1 cent a gallon on the sale or use of gasoline (first effective January 1, 1987). Congress scheduled the tax to expire on the earlier of December 31, 1991, or the last day of the month in which the Secretary of the Treasury estimates that net revenues in the fund are at least $500 million. This additional tax ended after August 31, 1990, because the Leaking Underground Storage Trust Fund had reached its net revenue target for cancellation. 22

[34] The Surface Transportation and Uniform Relocation Assistance Act of 1987 23 extended the highway-related excise taxes (including the tax on gasoline) through September 30, 1993.

GASOLINE EXCISE TAX FOR DEFICIT REDUCTION

[35] Under provisions of the Omnibus Budget Revenue Reconciliation Act of 1990 (OBRA90) 24 the tax rate on highway and motorboat fuels was increased by five cents per gallon. Thus, the tax increased from 9 to 14 cents per gallon of gasoline. Half of the increase in revenues from the gasoline tax imposed on highway use vehicles was dedicated as additional funding for the Highway Trust Fund. The remaining half in revenues was deposited in the General Fund and dedicated for federal deficit reduction. Of the 2.5-cent increase dedicated to the Highway Trust Fund, one-half cent was dedicated to the Mass Transit Account in that trust fund. Thus, the Congress raised the Mass Transit Account funding from 1 cent to 1.5 cents. OBRA90 also reinstated the Leaking Underground Storage Tank Trust Fund (LUST). The LUST tax recommenced at the same 0.1 cent per gallon tax rate. 25 The 14-Cent tax rate was scheduled to expire on September 30, 1995, while the LUST tax was scheduled to terminate three months later on December 31, 1995.

[36] The conventional wisdom that had held since the establishment of the Highway Trust Fund, which was that the gasoline tax is a user tax, was challenged. With the passage of OBRA90, the gasoline tax returned to the role it served prior to 1957: a general fund revenue source, at least in part.

[37] The following year the Congress passed the Intermodal Surface Transportation Efficiency Act (ISTEA) of 1991. 26 The revenue title is the Surface Transportation Revenue Act of 1991. This Act extends the highway-related excise taxes (including the tax on gasoline in section 8002(a)(3)) for four years. Hence, this law extends the tax on gasoline (without an increase in tax rate) through September 30, 1999. In addition, under provisions of the Act, states are permitted to spend their Highway Trust Fund grants on a broader range of alternative transportation modes and related infrastructure needs. This was done in response to the argument that highway users benefit from expenditures on mass transit and other transportation modes because the availability of these travel alternatives alleviates congestion on existing highways which in turn reduces the need to build additional roadways.

[38] Also included in provisions of ISTEA was the establishment of a new trust fund known as the National Recreational Trails Trust Fund. This fund receives tax transfers from the Highway Trust Fund that represent tax receipts (imposed on gasoline, diesel, and special motor fuels) collected from NONHIGHWAY recreational fuel use. Examples of recreational fuels are those used in vehicles on recreational trails or back country terrain, and non-business fuel used in outdoor recreational equipment such as camp stoves.

[39] Once again, the gasoline excise tax was changed under provisions of the Omnibus Budget Reconciliation Act of 1993 (OBRA93);(Section l3241(a)). 27 Under provisions of OBRA93, the additional 2.5 cents gasoline tax dedicated for deficit reduction was transferred to the Highway Trust Fund beginning October 1, 1995. This additional 2.5-cent tax rate is extended from October 1, 1995, to September 30, 1999. The highway portion of the fund receives 2 cents, while the Mass Transit Account is credited with 0.5 cent of the increased funding (for a total of 2 cents). In addition, OBRA93 provided for a permanent additional 4.3-cent per gallon tax on gasoline starting on October 1, 1993. Thus, the combination of the 2.5-cent OBRA90 gasoline tax rate and the permanent 4.3 cents OBRA93 gasoline tax rate resulted in a total of 6.8 cents per gallon dedicated to deficit reduction purposes between October 1, 1993, and October 1, 1995. Revenues collected from this 6.8-cent portion of the tax were placed in the General Fund of the United States Treasury.

[40] As previously related, provisions of OBRA90 terminated the LUST tax rate of 0.1 cent on December 31, 1995. Thus, the 18.3 cents federal gasoline excise tax rate was in effect from January 1, 1996, to October 1, 1997, before increasing to 18.4 cents with the reintroduction of the LUST tax. This 18.3 cents rate includes the permanent 4.3 cents initially dedicated to federal deficit reduction.

REVERSION FROM DEFICIT REDUCTION TO USER TAX STATUS

[41] During the early months of 1996, the price of gasoline at the pump was rising and a renewed interest developed in federal gasoline excise taxes. Three principal views developed. The first view was that the 4.3 cent increase in federal excise taxes imposed under OBRA93 should be repealed. Proponents of repeal argued that the 4.3 cent repeal could lead to a similar reduction in gasoline pump prices. Two camps developed which supported retaining the tax. Some supporters of the tax expressed the view that while the 4.3 cent tax should be retained, the tax revenues should be returned to the Highway Trust Fund for long-term capital improvements. They argued for increased finding of the nation's highway infrastructure. Others expressed the view that the monies should continue to be collected and continue to be used for deficit reduction. This camp of supporters argued that the gasoline price increase was temporary and that over the long term prices would trend lower. Proponents of this final view were concerned that repeal efforts were politically motivated since there were few issues that divided the principal candidates in the forthcoming Presidential elections. Partially in response to this debate, the Chairman of the House Ways and Means Committee, the Honorable Bill Archer, appointed a bi-partisan group to examine the tax treatment of each of the transportation modes with a goal of rationalizing the current myriad tax rules applying to the transportation sector.

[42] Included in the Taxpayer Relief Act of 1997 28 is a provision that returns the General Fund portion of the tax back to the Highway Trust Fund. This provision, first added by a Senate Amendment (and modified in Conference), provides that the 4.3 cent tax is divided between the Highway Account (3.45 cents) and the Mass Transit Account (0.85 cents). The provision is effective on October 1, 1997. Thus, of the total 18.3 cents dedicated to the Highway Trust Fund, 15.44 cents goes to the Highway Account and 2.96 cents to the Mass Transit Account. 29 As a consequence, the disposition of revenues is altered by the Act so that revenues will now accrue to the Highway Trust Fund. Consumers should see no price related change due to enactment of this provision since the tax rate on gasoline remains the same.

[43] In addition, the Taxpayer Relief Act of 1997 reinstated the Leaking Underground Storage Tank Trust Fund excise tax which had expired January 1, 1996. 30 The tax is reinstated at its prior tax rate of 0.1 cent per gallon on all types of motor fuels. While this portion of the law increases the tax rate which may be passed forward to consumers, the small size of the increase (one-tenth of one cent) is not likely to be noticeable by consumers. The tax rate change is effective from October 1, 1997, through March 31, 2005. 31

[44] While the former deficit reduction component of the federal gasoline tax continues without an expiration date, the 14 cents scheduled to expire on September 30, 1999 has been extended. The Congress not only extended the gasoline excise tax but also the other highway-related excise taxes. The House had proposed to extend the heavy truck tire tax until October 1, 2000 whereupon it would expire. However, in conference with the Senate, all the highway- related excise taxes were extended through September 30, 2005. The legislative vehicle for this extension is the Transportation Equity Act for the 21st Century 32 generally known as TEA21. The revenue portion of this Act (Title IX) is titled the Surface Transportation Revenue Act of 1998.

[45] This Act provides that the Highway Trust Fund no longer earns interest on unspent balances (effective September 30, 1998). The balance of funds that exceed $8 billion in the Highway Account was canceled on October 1, 1998. In addition, TEA21 provided that the National Recreational Trails Trust Fund established under ISTEA be repealed. Since the Congress had failed to appropriate funds, no revenues had been available for expenditure. The conference agreement noted that similar expenditure purposes are provided by authorized amounts from the Highway Trust Fund.

[46] On the following page appears a complete summary of the gasoline tax rate changes. This information is provided in table format.

        Table 1. Summary of Changes in the Rate of the Federal

 

                 Manufacturers' Excise Tax on Gasoline

 

 

 Rate of Tax in

 

 cents per gallon              Period to Which Applicable

 

 

      1                        June 21, 1932, to June 16, 1933

 

     1.5                       June 17, 1933, to December 31, 1933

 

      1                        January 1, 1934, to June 30, 1940

 

     1.5                       July 1, 1940, to October 31, 1951

 

      2                        November 1, 1951, to June 30, 1956

 

      3                        July 1, 1956, to September 30, 1959

 

      4                        October 1, 1959, to March 31, 1983

 

      9                        April 1, 1983, to December 1, 1986

 

     9.1                       January 1, 1987, to August 31, 1990 /a/

 

      9                        September 1, 1990, to November 30, 1990

 

    14.1                       December 1, 1990, to September 30, 1993

 

    18.4                       October 1, 1993 to December 31, 1995 /b/

 

    18.3                       January 1, 1996 /c/ to September 30,

 

                                 1997

 

    18.4                       October 1, 1997 /d/ to March 31, 2005

 

    18.3                       April 1, 2005 to September 30, 2005

 

     4.3                       October 1, 2005 and thereafter

 

FOOTNOTES TO TABLE 1

 

 

/a/ This act provided that 0.1 cent per gallon tax will terminate on the earlier of December 31, 1991, or when the Secretary of the Treasury determines that taxes equivalent to at least $500 million in net revenues are in the Trust Fund. This additional tax terminated after August 31, 1990, because the LUST Trust Fund had reached its net revenue target for termination. (Internal Revenue Service Announcement 90-82, released June 27, 1990.)

/b/ Beginning on October 1, 1995, the revenues collected from the 2.5 cents "deficit reduction rate" are to be credited to the account of the Highway Trust Fund. Thus, while the gasoline excise tax rate holds constant at 18.4 cents, the distribution of amounts collected from the gasoline excise tax changes. The Highway Trust Fund will receive increased revenues as the rate credited to that fund increases from 11.5 to 14 cents. At this same time, the amount credited to the General Fund decreases from 6.8 to 4.3 cents.

/c/ Pursuant to provisions of OBRA90, the LUST tax terminated on December 31, 1995

/d/ Beginning on October 1, 1997, the Taxpayer Relief Act of 1997 provides that amounts previously dedicated for deficit reduction be redirected to the Highway Trust Fund. Additionally, the LUST tax which had terminated on December 31, 1996 was re-authorized for the period October, 1, 1997, through March 31, 2005.

 

END OF FOOTNOTES TO TABLE 1

 

 

FOOTNOTES

 

 

1 Revenue Act of 1932, Public Law 154, 72d Congress, approved June 6, 1932.

2 Act to Extend the Gasoline Tax for One Year, to Modify Postage Rates on Mail Matter and for other Purposes, Public Law 73, 73rd Congress, approved June 16, 1933.

3 National Industrial Recovery Act, Public Law 67, 73rd Congress, approved June 16, 1933.

4 Revenue Act of 1934, Public Law 216, 73rd Congress, approved May 10, 1934.

5 Revenue Act of 1940, Public Law 656, 76th Congress, approved June 25, 1940.

6 Revenue Act of 1941, Public Law 250, 77th Congress, approved September 20, 1941.

7 Revenue Act of 1951, Public Law 183, 82d Congress, approved October 20, 1951.

8 The Excise Tax Reduction Act of 1954, Public Law 324, 83rd Congress, approved March 31, 1954.

9 Tax Rate Extension Act of 1955, Public Law 18, 84th Congress, approved March 30, 1955.

10 Tax Rate Extension Act of 1956, Public Law 458, 84th Congress, approved March 29, 1956.

11 Act to Amend the Internal Revenue Code of 1954 to Relieve Farmers From Excise Taxes in the Case of Gasoline and Special Fuels Used on Farms for Farming Purposes, Public Law 266, 84th Congress, approved April 2, 1956.

12 Federal-Aid Highway and Highway Revenue Act of 1956, Public Law 627, 84th Congress, approved June 29, 1956.

13 Ibid.

14 For additional information and a discussion of the federal excise tax imposed on tires, see U.S. Library of Congress, Congressional Research Service. Federal Excise Tax on Tires: Where the Rubber Meets the Road. CRS Report RL30302, by Louis Alan Talley.

15 Federal-Aid Highway Act of 1959, Public Law 86-342, approved September 21, 1959.

16 Federal-Aid Highway Act of 1961, Public Law 87-61, approved June 29, 1961.

17 Federal-Aid Highway Act of 1970, Public Law 91-605, approved December 31, 1970.

18 Federal-Aid Highway Act of 1976, Public Law 94-280, approved May 5, 1976.

19 Surface Transportation Assistance Act of 1978, Public Law 95-599, approved November 6, 1978.

20 Surface Transportation Assistance Act of 1982, Public Law 97-424, approved January 6, 1983.

21 Superfund Revenue Act of 1986, Public Law 99-499, approved October 17, 1986.

22 Internal Revenue Service Announcement 90-82, released June 27, 1990.

23 Surface Transportation and Uniform Relocation Assistance Act of 1987, Public Law 100-17, approved April 2, 1987.

24 Omnibus Budget Reconciliation Act of 1990, Public Law 101- 508, approved November 5, 1990.

25 This act also instituted a new 2.5 cents per gallon tax on fuels used in rail transportation effective on December 1, 1990. Rail transportation generally uses diesel fuel. All revenues from this new tax go to general fund revenues with the tax scheduled to expire on October 1, 1995.

26 Intermodal Surface Transportation Efficiency Act (ISTEA) of 1991, Public Law 102-240, approved December 18, 1991.

27 Omnibus Budget Reconciliation Act of 1993, Public Law 103- 66, approved August 10, 1993.

28 Taxpayer Relief Act of 1997, Public Law 105-34, approved August 5, 1997.

29 A technical correction contained in the Transportation Equity Act for the 21st Century (discussed later in this report) provides that deposits are to be equal to 2.86 per gallon rather than the 2.85 cents provided in the 1997 Act.

30 Ibid.

31 For additional information and a discussion of the LUST tax, see U.S. Library of Congress, Congressional Research Service. Leaking Underground Storage Tank Cleanup Issues. CRS Report 97-471 E, by Mary Tiemann.

32 Transportation Equity Act for the 21st Century, Public Law 105-178, approved June 9, 1998.

 

END OF FOOTNOTES
DOCUMENT ATTRIBUTES
  • Authors
    Talley, Louis Alan
  • Institutional Authors
    Congressional Research Service
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    excise taxes
    Highway Trust Fund
    gasoline tax
  • Industry Groups
    Transportation
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 1999-30292 (14 original pages)
  • Tax Analysts Electronic Citation
    1999 TNT 180-17
Copy RID