CRS REPORTS ON DISPARATE TAXATION OF HIGHWAY MOTOR FUELS.
CRS REPORTS ON DISPARATE TAXATION OF HIGHWAY MOTOR FUELS.
- AuthorsGushee, David E.Lazzari, Salvatore
- Institutional AuthorsCongressional Research Service
- Index Termsfuel, taxes, studiesfuel, dieseloil and gas taxationfuel, nonconventionalstate taxation, fuel
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 93-9835
- Tax Analysts Electronic Citation93 TNT 195-46
David E. Gushee
Senior Specialist in Environmental Policy
Office of Senior Specialists
and
Salvatore Lazzari
Specialist in Public Finance
Economics Division
March 12, 1993
SUMMARY
For the past five years, Congress has been gradually increasing emphasis on the role that alternative motor fuels might play as a means to reduce oil imports, improve urban air quality, and provide domestic jobs. As a result of its legislative actions over this period, there may be as many as 3 million alternative fuel vehicles on the road by 2010.
The latest congressional action, the Energy Policy Act of 1992, includes tax incentives applied to alternative fuel vehicles and to refueling facilities for alternative fuels. However, no action has been taken to rationalize the disparate Federal highway taxes applied to the different fuels. These differences are the result of a series of independent actions taken over many decades during most of which there was no contemporary interest in the current policy goal of increased use of domestic, nonpetroleum fuels.
Similarly, at the State level, motor vehicle fuel taxation has been driven by the twin needs of revenue generation and highway infrastructure development. Motor fuels are taxed primarily on a gallonage basis without regard to fuel energy content. Until recently, and even then only in a few States, conscious stimulation of alternative motor fuels has not been a policy goal. In most of the States where stimulation has been a goal, ethanol has been the primary beneficiary with its primary use as an additive to gasoline rather than as an alternative fuel.
As a result, the different fuels have widely disparate tax rates. Thus, prices at the retail service station pump, particularly when corrected to a common energy content, are affected very differently by the combination of Federal and State highway taxes. Two -- compressed natural gas (CNG) and electricity -- are favored, electricity by not being viewed as a highway fuel and thus not carrying a highway tax burden at either the Federal or State level, and CNG (a) by virtue of being untaxed at the Federal level because it is not a liquid and (b) by being treated on an equivalent energy content basis by the States. Three others -- propane, liquefied natural gas (LNG), and methanol -- are significantly disfavored, because they have lower energy densities than gasoline (and the energy-equated CNG) and thus pay higher tax rates per unit of energy. Methanol takes the biggest hit.
This report reviews Federal and State policies with respect to taxation of highway motor fuels. It includes a table showing State by State the estimated impact of combined Federal and State highway taxes per fuel gallon and per gallon of gasoline equivalent.
TABLE OF CONTENTS
INTRODUCTION
FEDERAL HIGHWAY TAXES ON MOTOR FUELS
STRUCTURE
EVOLUTION OF FEDERAL HIGHWAY EXCISE TAXES ON MOTOR FUELS
Deficit Reduction
Highway Finance
Energy Policy Considerations
STATE HIGHWAY TAXES ON MOTOR FUELS
STRUCTURE
EVOLUTION OF STATE HIGHWAY EXCISE TAXES ON MOTOR FUELS
IMPACT OF STATE MOTOR FUEL TAXES
ASSUMPTIONS UNDERLING TABLE 4
TABLES
TABLE 1. Federal Highway Taxes
TABLE 2. State Tax Rates on Motor Fuels -- as of January 1, 1993
TABLE 3. State Sales Taxes on Motor Fuels
TABLE 4. Comparative State-to-State Fuel Prices at the Pump
INTRODUCTION
For the past five years, Congress has been gradually increasing emphasis on the role that alternative motor vehicle fuels might play as a means to reduce oil imports, improve urban air quality, and provide domestic jobs. It has passed during this period three bills designed to stimulate the technology, economics, and infrastructure needed for these fuels to succeed against the incumbent fuels gasoline and diesel. 1
The latest of these bills, the Energy Policy Act of 1992, includes tax incentives applied to alternative fuel vehicles and to refueling facilities for alternative fuels. However, no action has been taken to rationalize the strikingly disparate highway taxes applied to the different fuels as a result of a series of independent actions taken over many decades during most of which there was no contemporary interest in the current policy goal of increased use of domestic, nonpetroleum fuels.
Similarly, at the State level, motor fuel taxation has been driven by the twin needs of revenue generation and highway infrastructure development. Until recently, and even then only in a few States, conscious stimulation of alternative motor fuels has not been a policy goal.
As a result, the different fuels have widely disparate tax rates. Thus, prices at the retail service station pump, particularly when corrected to a common energy content, are affected very differently by highway taxes. Two -- compressed natural gas (CNG) and electricity -- are favored, electricity by not being viewed as a highway fuel and thus not carrying a highway tax burden at either the Federal or State level, and CNG (a) by virtue of being untaxed at the Federal level because it is not a liquid and (b) by being treated on an equivalent energy content basis by the States. Three others -- propane, liquefied natural gas (LNG), and methanol -- are significantly disfavored, because they have lower energy densities than gasoline (and the energy-equated CNG) and thus pay higher tax rates per unit of energy. Methanol takes the biggest hit.
Given that there will be a significant discussion of energy taxation in the 103d Congress, the purpose of this report is to describe the current status of highway fuel taxation federally and at the State level.
FEDERAL HIGHWAY TAXES ON MOTOR FUELS
STRUCTURE
The Internal Revenue Code (IRC) imposes excise taxes on a variety of motor fuels used in highway transportation, with the tax rates varying by type of fuel and its use. The traditional fuels, gasoline and diesel used in highway motor vehicles, are taxed at 14.1 cents per gallon and 20.1 cents per gallon, respectively [IRC section 4081 and 4091]. These tax rates have several components. The 14.1 cents rate comprises an 11.5 cents highway trust fund rate (which finances the Federal Highway Trust Fund), a 2.5 cents deficit reduction rate (which is designated to the general fund for deficit reduction), and a 0.1 cents Leaking Underground Storage Tank (LUST) trust fund rate. 2 The 20.1 cents diesel tax rate comprises the 17.5 cents highway trust fund rate, the 2.5 cents deficit reduction rate, and the 0.1 cents LUST trust fund rate [section 4091, and section 4041(a)].
Diesel used in trains is taxed at 2.6 cents per gallon, comprising the deficit reduction rate and the LUST fund rate only. 3
Liquid special motor fuels such as naphtha, benzene, benzol, casinghead and natural gasoline -- these are also known as gasoline substitutes -- are also subject to the 14.1 cents rate if the fuel is used in a highway vehicle for purposes that are not specifically tax- exempt [section 4041(a)(2)]. Liquefied petroleum gas (LPG) 4 is taxed at 14.0 cents per gallon since it is the only gasoline substitute not subject to the 0.1 cents LUST tax. 5
Mixtures of motor fuels and biomass-derived alcohols (either methanol or ethanol) are partially tax-exempt, with the amount of the exemption depending upon the fraction of alcohol that is in the mixture and the type of alcohol. For gasohol mixtures -- blends of gasoline and ethanol 6 that are 10-percent ethanol -- are taxed at 8.7 cents per gallon (the exemption is 5.4 cents). Mixtures that are 7.7-percent ethanol are taxed at 9.94 cents per gallon (the exemption is 4.16 cents). And finally, mixtures that are 5.7-percent ethanol are taxed at 11.O2 cents per gallon (the exemption is 3.08 cents per gallon). 7
The exemption for alcohol fuels mixtures also applies to blends of diesel and biomass-derived alcohol and blends of a special motor fuel and biomass-derived alcohol. Alcohol blended with diesel -- sometimes called "dieselhol" -- is taxed at the rate of 14.7 cents (the exemption is 5.4 cents, the same as for gasoline). Alcohol blended with one of the special motor fuels is assessed an 8.7 cents tax rate (the exemption is again 5.4 cents).
It should be noted that in all these cases of alcohol blends, the alcohol must be at least 190 proof (95 percent pure alcohol) and the alcohol cannot be derived from petroleum, natural gas, or coal (including peat). 8 The latter limitation means that exempt alcohol is currently derived from biomass. Thus, while both methanol and ethanol qualify for the exemption, methanol is in effect disqualified because it currently is mostly produced from natural gas. However, in the case of special motor fuels that are 85 percent alcohol (ethanol or methanol) derived from natural gas, there is a separate exemption of 7.0 cents per gallon [the tax rate is 7.1 cents per gallon (section 4041(m))]. 9
Alcohol fuels mixtures that contain 85 percent alcohol made from biomass are taxed at varying rates. In the case of 85 percent ethanol blends, the tax rate is 8.05 cents consisting of a 5.5 cents highway trust fund rate (a 6.0 cents exemption from this rate), the 2.5 cents deficit reduction rate, and a 0.05 cents LUST fund rate. In the case of 85 percent methanol blends, the tax rate is 8.65 cents per gallon, consisting of a 6.1 cents highway trust fund rate (a 5.4 cents exemption from this rate), the 2.5 cents deficit reduction rate, and the 0.05 cents LUST fund rate. Note that the LUST fund rate on these 85-percent mixtures is one-half the rate that applies to all other taxable fuels [4041(b)(2)].
Finally, it is important to underscore the point that the highway motor fuels excise taxes 10 apply to liquid fuels only; electricity and gaseous fuels, such as compressed natural gas, are not taxed.
A summary of the tax rates on the various highway motor fuels is shown in table 1. The first row of numbers presents the tax rates on a per gallon basis, following the discussion in the text. As these data clearly show, motor fuel tax rates display wide variation among fuels.
The second row of numbers shows the energy content per gallon of each of the fuels in British thermal units (Btu's). 11 All of the alternatives have less energy per gallon than gasoline or diesel fuel. 12 The third row of numbers shows the tax rates adjusted for the energy content compared to that of a gallon of gasoline. For example, since propane contains 85,000 Btu per gallon compared to gasoline's 115,000 Btu, 13 35 percent more of it is required to deliver the same quantity of energy as a gallon of gasoline. Thus, the "effective" excise tax rate is 18.9 cents per gallon, 35 percent more than the 14.0 cents per gallon tax.
TABLE 1. Federal Highway Taxes (Cents per Gallon)
Gasoline Diesel Methanol Gasohol
14.1 /a/ 20.1 7.1 8.7
Fuel Energy Content (Btu per Gallon)
115,000 135,000 57,000 111,000 /b/
Federal Highway Tax (Cents per Gallon of Gasoline Equivalent)
14.1 17.1 14.1 14.6
[TABLE CONTINUED]
Natural Natural
Gas Gas Propane
(CNG) (LNG) (LPG) Electricity
None 14.1 14.0 None
Fuel Energy Content (Btu per Gallon)
115,000 75,000 85,000 ---
Federal Highway Tax (Cents per Gallon of Gasoline Equivalent)
None 21.6 18.9 None
/a/ In addition to the highway tax (14.0 cents/gal.) and the
Underground Storage Tank Fund tax (0.10 cents/gal.), there are two
additional taxes on imported petroleum products, including gasoline:
the Hazardous Substance Trust Fund (0.23 cents/gal.), and Oil Spill
Liability Trust Fund (0.12 cents per gal.). Domestically produced
gasoline carries equivalent taxes, but imposed on the crude oil used
in its manufacture.
/b/ The ethanol is assumed to contain 76,000 Btu per gallon.
EVOLUTION OF FEDERAL HIGHWAY EXCISE TAXES ON MOTOR FUELS
The present structure of Federal excise taxes on motor fuels evolved from three public policy concerns: (1) revenue generation for budget deficit reduction; (2) revenue generation for highway infrastructure financing; and (3) energy policy considerations.
DEFICIT REDUCTION
Revenue for purposes of deficit reduction was the rationale for enacting the gasoline tax in 1932 and for several of the many subsequent increases in tax rates as well as extensions of the expiration dates. The Federal excise tax on gasoline was first enacted as part of the Revenue Act of 1932 (P.L. 154), although the first known Federal proposal to tax gasoline goes back to the Wilson Administration. 14 The tax, which was initially 1 cent per gallon, was enacted as part of a program of tax increases designed to generate additional revenue to reduce budget deficits, which were looming due to the deepest and longest economic recession in U.S. history. Revenues from the tax were allocated to the general fund for deficit reduction.
Revenue generation for deficit reduction was also the underlying rationale for the gasoline tax rate increases of 1940, 1941, 1951, and 1954. The increases of 1951, which were part of the Revenue Act of 1951, raised the gasoline tax form 1.5 cents to 2 cents per gallon and introduced the tax on diesel fuel, also at the rate of 2 cents per gallon. Revenue generation to help finance the Korean War was an additional reason for these tax rate increases. Revenue generation for deficit reduction was part of the rationale for the tax rate increases of 1990. The Omnibus Budget and Reconciliation Act of 1990 (P.L. 101-508) raised the gasoline and diesel fuel taxes, which had increased to 9.1 cents and 15.1 cents per gallon respectively during the 1980s, by another 5 cents per gallon and authorized that revenues from 2.5 cents of the 5.0 cents increase would go toward deficit reduction rather than the highway trust fund. The 1990 law also allowed diesel fuel used in trains to be taxed at 2.6 cents per gallon, with 2.5 cents for deficit reduction and 0.1 cent for the LUST fund. Prior to the 1990 law diesel used in trains was tax-exempt because it was a non-highway use.
HIGHWAY FINANCE
In 1956, the Highway Trust Fund was created under the Federal- Aid Highway Act of 1956 (P.L. 84-627). This marked a fundamental change in Federal highway financing -- from general revenues to motor fuels taxes. All gasoline tax revenues and most other highway user revenues went into that fund for highway construction finance. The purpose of the trust fund was to finance the cost of the interstate highway system. Thus, revenues to finance highway infrastructure rather than revenue generation for deficit reduction became the primary rationale underlying most of the increases in tax rates and expansion of the tax bases since then. From 1956 to 1982, there were two increases in tax rates, several extensions of expiration dates, and repeals of scheduled declines in tax rates. Each of these amendments was made to generate more money of the Highway Trust Fund programs.
Beginning in late 1982, another objective was added to the list. Rather than fiscal deficits or energy security, attention began to focus on the large portion of the roads and highways in this country that had fallen into disrepair, and on the unemployment rate, which had risen steeply as a result of the 1981-82 economic recession. Between 1982 and 1990 there were four increases in the motor fuels excise taxes. Title I of the Surface Transportation Assistance Act of 1982 (P.L. 97-424) boosted the motor fuel excise taxes by 5 cents per gallon (to 9 cents). The 1982 law also provided that 1 cent of the 5 cents increase would be allocated to a special mass transit account created in 1964. The Tax Reform Act of 1984 (P.L. 98-369) increased the diesel fuel tax another 6 cents per gallon in return for a repeal of a scheduled boost in truck taxes based on vehicle weights. This made the tax on diesel fuel 15 cents per gallon. A 0.1 cent per gallon tax was added by the Superfund Amendments and Reauthorization Act of 1986 (P.L. 99-499) to pay for the cleaning up of leaking underground storage tanks.
ENERGY POLICY CONSIDERATIONS
Beginning in the 1970s, energy policy considerations began to influence both the level of motor fuel taxation and, more importantly, the structure of tax rates. Reducing petroleum consumption and importation made it easier to support motor fuels excise tax increase proposals, and was the rationale for reducing the tax rates on alternative fuels, particularly alcohol fuels. Proposals to increase the Federal excise tax on gasoline became common during and after the 1973/1974 Arab oil embargo and subsequent rises in crude oil prices. Coming in the aftermath of the 1973-74 oil shock, such proposals were intended largely to reduce consumption of motor fuels (by raising their prices), and thereby reduce oil imports. Perhaps the most ambitious of these proposals was that of Senator Jackson, proposing to increase the tax by $1.00 per gallon.
The concept of taxing alternative fuels at lower rates, which began in the middle-70s in response to the first oil shock, was actually realized in 1978 with the enactment of the Energy Tax Act (P.L. 95-618). 15 Prior to this law, there were no special exemptions for highway use of alternative motor fuels.
The Federal exemption for alcohol fuels under the 1978 law was for the full amount of the gasoline tax: 4 cents per gallon. The Crude Oil Windfall Profits Tax (P.L. 96-223) extended the 4 cents exemption from October 1, 1984, to December 31, 1992. The Surface Transportation Assistance Act of 1982 (P.L. 97-424) raised the gasoline tax from 4 cents to 9 cents per gallon and also changed the exemption for gasohol from the complete 4 cents exemption to a partial 5 cents exemption (gasohol would be taxed at 4 cents per gallon instead of 9 cents per gallon). The Deficit Reduction Act of 1984 (P.L. 98-369) raised the diesel fuel tax from 9 cents to 15 cents per gallon as part of a compromise that also lowered the highway use taxes on trucks. The 1984 tax law also raised the gasohol exemption from 5 cents to 6 cents (i.e., it reduced the tax rate for gasohol from 4 cents to 3 cents), and retained the 9 cents exemption for "neat" alcohol fuels, and provided that alcohol produced from natural gas would also qualify for the exemption. The Tax Reform Act of 1986 (P.L. 99-514) reduced the excise tax exemption for 85 percent alcohol from 9 cents to 6 cents per gallon (for sales made beginning on 1987). The Technical and Miscellaneous Revenue Act of 1988 (P.L. 100-647) made minor liberalizations to the excise tax rules. Finally, the OBRA of 1990 reduced the alcohol fuels exemption to 5.4 cents per gallon. 16
The Energy Policy Act of 1992 (P.L. 102-486) extended the gasohol excise tax exemption to gasohol that contains less than 10 percent alcohol. Two categories of gasohol mixtures are prescribed: mixtures containing 7.7-percent alcohol; and mixtures containing 5.7- percent alcohol. The exemption for 7.7 percent mixtures is 4.16 cents per gallon (the tax rate is 9.94 cents); the exemption for 5.5 percent mixtures is 3.08 cents per gallon (the tax rate is 11.02 cents).
STATE HIGHWAY TAXES ON MOTOR FUELS
STRUCTURE
States tax motor fuels through a combination of excise taxes and other fees and taxes. State excise taxes are tabulated in table 2. Some impose sales taxes on top of the Federal and State excise taxes; others use the pre-tax gasoline price as the base. Many States impose specific-purpose fees such as their own versions of the Underground Storage Tank tax, inspection fees, and the like. Fifteen States have authorized cities and counties to add their own charges. Communities in 11 of those States have chosen to do so.
Many States have tax policies for ethanol used in motor fuels and propane used as a motor fuel. With respect to ethanol, the special provisions take the form of a waiver of part of the highway tax or a credit per gallon of ethanol produced in the State and used in the motor fuel or, in some cases, both. With respect to propane, a number of States substitute a fee (mandatory in some States, optional in others) based on vehicle type in place of the highway tax. The fee in most cases comes out close to what the tax would have cost for a vehicle of average mileage. High-mileage vehicles end up paying a somewhat lower tax rate per gallon. These States also have a gallonage tax for out-of-State or nonfee-paying vehicles or, in some cases, require an LPG-fueled vehicle to buy a permit to operate in the State. Two States (Colorado and Texas), now have fee systems for natural gas-fueled vehicles.
Most States, however, do not have special policies for methanol, natural gas, or electricity, since they are too new as motor fuels to have received specific attention. In most States, these new alternative fuels are swept up under a general approach and taxed on a volume-equivalent basis. 17 In a few States, some or all are not taxed at all, either through lack of attention or because of special policy (particularly the case where a fuel-producing State seeks to develop motor fuel markets for its indigenous fuel).
Thirty three States have sales taxes on motor fuels. They range from 2 percent to over 6 percent. They are applied differently from State to State -- in some cases to the sales price of gasoline less all highway taxes, in other cases to the sales price including all highway taxes. The details are laid out in table 3.
EVOLUTION OF STATE HIGHWAY EXCISE TAXES ON MOTOR FUELS
The present structure of State motor fuels taxes evolved predominantly from the need for revenues to finance highway construction, and secondarily for general revenue purposes. This is generally true for each State. Energy policy considerations were not a factor in the evolution of the structure of motor fuels taxes in the States, although in recent years some States introduced special provisions for ethanol and propane, as was discussed above.
Oregon enacted the first gasoline tax in 1919 at the rate of 1 cents per gallon thus initiating the policy of user financing of highway spending. 18 By 1929, every State in the Union had a gasoline tax for highway finance, at rates ranging from 3 cents to 7 cents per gallon. Prior to 1919, all highway construction was financed from general tax revenues, generated primarily from the property tax.
Between 1919 and 1980, State gasoline taxes were changed infrequently, and usually 1 cents at a time. But, through most of this period, State gasoline tax collections grew enormously due to the growth in the demand for highway travel and in the number of automobiles. For instance, gasoline tax collections grew from $1 million in 1919 to $1,124 million in 1947. By 1948, motor fuels taxes yielded more revenue than any other State excise tax.
TABLE 2. State Tax Rates on Motor Fuels -- As of January 1, 1993
(Cents per Gallon)
State Gasoline Diesel Methanol Gasohol
_____ ________ ______ ________ _______
Alabama 18 19 16 18
Alaska 8 8 None None
Arizona 18 18 18 18
Arkansas 18.7 18.7 18.5 16.7
California 17 17 8 17
Colorado 22 20.5 22 22
Connecticut 28 18 28 27
Delaware 19 19 19 19
Dist of Col 20 20 20 20
Florida /a/ 11.8 21 11.8 11.8
Georgia 7.5 7.5 7.5 7.5
Hawaii 16 16 16 16
Idaho 21 21 21 21
Illinois /a/ 19 21.5 19 19
Indiana /a/ 15 16 15 15
Iowa 20 22.5 19 19
Kansas 18 20 20 18
Kentucky /a/ 15.4 12.4 15 15.4
Louisiana /a/ 20 20 20 20
Maine 19 20 19 19
Maryland 23.5 21.75 23.5 23.5
Massachusetts /a/ 21 21 21 21
Michigan 15 15 15 15
Minnesota /a/ 20 20 20 20
Mississippi 18.2 18.2 18.2 18.2
Missouri 13.03 13 13 13.03
Montana /a/ 21.4 21.4 21.4 21.4
Nebraska /a/ 24.6 24.6 24.6 24.6
Nevada 24 27 20.5 24
New Hampshire /a/ 18.6 18.6 18.6 18
New Jersey /a/ 10.5 13.5 10.5 10.5
New Mexico /a/ 17 17 16 17
New York /a/ 22.89 24.84 8 22.89
North Carolina /a/ 22.3 22.3 22.3 22.3
North Dakota /a/ 17 17 17 17
Ohio /a/ 21 21 21 21
Oklahoma 17 14 16 17
Oregon 24 24 22 19
Pennsylvania /a/ 22.4 22.4 12 22.4
Rhode Island /a/ 26 26 26 26
South Carolina 16 16 16 16
South Dakota /a/ 18 18 16 16
Tennessee 20 17 20 20
Texas 20 20 20 20
Utah 19 19 19 19
Vermont /a/ 16 17 16 16
Virginia /a/ 17.5 16 17.5 17.5
Washington /a/ 23 23 23 20.7
West Virginia /a/ 20.35 20.35 20.35 20.35
Wisconsin /a/ 22.2 22.2 22.2 22.2
Wyoming /a/ 9 9 5 5
[table continued]
CNG LNG Propane Electricity
___ ___ _______ ___________
Alabama 17 17 /c/ None
Alaska /b/ /b/ 8 None
Arizona 1 1 18 None
Arkansas None None /c/ None
California 7 7 /d/ None
Colorado 20.5 20.5 /c/ None
Connecticut 28 28 28 None
Delaware 19 19 19 None
Dist of Col 20 20 20 None
Florida /a/ 11.8 11.8 /c/ None
Georgia 7.5 7.5 7.5 None
Hawaii /b/ /b/ 11 None
Idaho 21 21 /d/ None
Illinois /a/ 19 19 19 None
Indiana /a/ 15 15 /c/ None
Iowa 16 16 20 None
Kansas 17 17 /d/ None
Kentucky /a/ 12 12 15.4 None
Louisiana /a/ 20 20 /c/ None
Maine 19 19 18 None
Maryland 21.75 21.75 21.75 None
Massachusetts /a/ 21 21 9.7 None
Michigan 15 15 15 None
Minnesota /a/ 20 20 /c/ None
Mississippi 18.2 18.2 17 None
Missouri 13 13 13 None
Montana /a/ 7.49 7.49 /c/ None
Nebraska /a/ 24.6 24.6 24.6 None
Nevada 20.5 20.5 23 None
New Hampshire /a/ 18 18 18 None
New Jersey /a/ 5.25 5.25 5.25 None
New Mexico /a/ 16 16 /c/ None
New York /a/ 8 8 8 None
North Carolina /a/ 22.3 22.3 22.3 None
North Dakota /a/ 17 17 17 None
Ohio /a/ 21 21 21 None
Oklahoma 16 16 /d/ None
Oregon 22 22 24 None
Pennsylvania /a/ 12 12 22.4 None
Rhode Island /a/ 26 26 26 None
South Carolina 16 16 16 None
South Dakota /a/ 18 18 16 None
Tennessee 13 13 /d/ None
Texas 20 20 /c/ None
Utah 19 19 /d/ None
Vermont /a/ 16 16 /c/ None
Virginia /a/ 16 16 16 None
Washington /a/ 23 23 /c/ None
West Virginia /a/ 20.35 20.35 20.35 None
Wisconsin /a/ 22.2 22.2 22.2 None
Wyoming None None None None
FOOTNOTES TO TABLE
/a/ The following States have special provisions:
Florida: Tax rates are adjusted annually. For gasoline and gasohol,
there is also a State Comprehensive Enhanced Transportation System
Tax (SCETS) that varies by county from 0 to 4.2 cents per gallon.
Illinois: Motor carriers pay an additional 5.0 cents per gallon on
diesel.
Kentucky: Tax rates are adjusted quarterly. A 2 percent surtax is
imposed on gasoline and 4.7 percent on special fuels for any vehicle
with 3 or more axles. There is an additional 2 cents per gallon on
vehicles over 50,000 lbs.
Louisiana: There is a producer credit of $1.40 per gallon of ethanol.
Massachusetts: Tax rates are adjusted quarterly.
Minnesota: There is a credit of 20 cents per gallon of ethanol used
to make gasohol.
Montana: There is an alcohol distillers' credit of 30 cents per
gallon of ethanol produced in qualified facilities in the State.
Nebraska: Rates are adjusted quarterly. There is a producer incentive
credit of 20 cents per gallon of ethanol produced in qualified
facilities in the State.
New Hampshire: Alternative fuel vehicles pay twice the usual
registration fee in lieu of the gallonage tax.
New Jersey: There is also a petroleum products gross receipts tax.
New York: Tax rates are adjusted annually. There is an additional tax
on motor carriers of 8.3 cents per gallon on gasoline, 8.9 cents on
diesel.
North Carolina: Tax rates are adjusted semiannually.
North Dakota: A special excise tax of 2 percent is imposed on all
sales of LPG and diesel that are exempted from the gallonage tax if
the fuel is sold for use in the State. There is a producer credit of
40 cents per gallon of agriculturally derived alcohol produced in the
State and used to make gasohol.
Ohio: Tax rates are adjusted annually. Dealers are refunded 15 cents
per gallon of each qualified fuel (methanol or ethanol) blended with
unleaded gasoline.
Pennsylvania: Motor carriers pay an additional 6 cents per gallon.
Rhode Island: Tax rates are adjusted quarterly.
South Dakota: There is a credit at the rate of the gasoline tax to
distributors blending ethanol with gasoline to produce ethanol. There
is also a producer incentive payment of 20 cents per gallon of
ethanol used in gasohol.
Vermont: Diesel vehicles over 10,000 lbs. pay 26 cents per gallon.
Virginia: Motor carrier trucks with more than 2 axles pay an
additional 3.5 cents per gallon.
Washington: There is a credit of 60 percent of the gasoline tax for
every gallon of alcohol used in gasohol.
West Virginia: Tax rates are adjusted annually.
Wisconsin: Tax rates are adjusted annually.
Wyoming: LPG is subject to a sales tax.
/b/ Alaska and Hawaii have not addressed tax policy for CNG and
LNG.
/c/ Registered LPG vehicles must pay an annual fee based on
vehicle type in lieu of the gallonage tax.
/d/ Registered LPG vehicles may pay an annual fee in lieu of the
gallonage tax.
END OF FOOTNOTES TO TABLE
Sources: Federal Highway Administration. Office of Highway
Information Management. Telephone calls to State taxation
departments.
TABLE 3. State Sales Taxes on Motor Fuels
State Percent Remarks
_____ _______ _______
Alabama 4 Applies to fuel not taxable under
gallonage tax laws
Arizona 5 Applies to fuel not taxed under the motor
fuel or use fuel taxes
Arkansas 4.5 Special fuel for municipal buses and
gasoline are exempt
California 6 Applies to sales price including Federal
and State motor fuel taxes
District of Columbia 6 Applies to fuel not taxable under
gallonage tax laws
Georgia 3 Applies to sales price including Federal
motor fuel tax
Hawaii 4 Applies to sales price excluding Federal
and State motor fuel taxes. Alcohol fuels
are exempt
Illinois 6.25 Applies to sales price excluding Federal
and State motor fuel taxes. For gasohol,
only 70 percent of the price is subject
to sales tax
Indiana 5 Applies to sales price excluding Federal
and State motor fuel taxes
Iowa 5 Fuel on which the gallonage tax was paid
and not refunded is exempt. Gasohol is
exempt
Kansas 4.5 Applies to fuels not taxable under the
gallonage tax laws
Kentucky 6 Applies to sales price, exclusive of
Federal tax, of fuels not taxable under
gallonage tax laws
Louisiana 4 Fuels subject to gallonage tax are
exempt. Gasohol is exempt if alcohol is
produced in-State
Maine 6 Applies to motor fuel not taxed at the
maximum rate for highway use under the
gallonage tax laws
Massachusetts 5 Applies to fuels not taxable under the
gallonage tax laws
Michigan 4 Applies to sales price including Federal
motor fuel tax except for certain multi-
passenger, for-hire vehicles on scheduled
routes
Minnesota 6 Applies to fuels not taxable under the
gallonage tax laws
New Mexico 5 Applies to fuels not taxable under
gallonage tax laws. Ethanol blends
deductible under the gasoline tax laws
are exempt
New York 4 Applies to sales price including Federal
motor fuel tax
North Dakota 5 Applies to fuels not taxable under
gallonage tax laws
Ohio 6 Applies to fuels not taxable under
gallonage tax laws
Oklahoma 4.5 Applies to fuels not taxable under
gallonage tax laws
Pennsylvania 6 Applies to fuels not taxable under
gallonage tax laws
Rhode Island 7 Applies to sales price. Gasoline is
exempt
South Carolina 5 Applies to aviation gasoline only
South Dakota 4 Applies to fuels not taxable under
gallonage tax laws
Tennessee 4.5 Applies to aviation fuel only
Texas 6.25 Applies to fuels not taxed or exempted
under other laws
Utah 5 Applies to fuels not taxable under
gallonage tax laws
Virginia 2 Applies to retail sales within counties
and cities with subway or bus systems
owned and operated by transportation
agencies
Washington 6.5 Applies to sales price excluding Federal
and State gallonage taxes. Alcohol for
use as a motor vehicle fuel is exempt
Wisconsin 6 Applies to fuels not taxable under
gallonage tax laws
Wyoming 3 Applies to sales price of LPG. Gasoline
and diesel subject to gallonage tax are
exempt
Lagging gasoline tax revenues due to energy conservation in response to the energy price shocks of the 1970s, combined with rising highway repair costs and demand for additional highways, created pressure to raise gasoline tax rates. As a result, during the 1980s most States increased taxes frequently and by relatively large amounts. Between 1980 and 1988, for example, there were 107 increases in gasoline taxes at the State level. 19
IMPACT OF STATE MOTOR FUEL TAXES
The combination of Federal and State motor fuel and sales taxes on gasoline adds up to 40 cents or more to the pretax price at the service station. For alternative fuels with lower energy densities than gasoline, the taxes, when applied per gallon of fuel unadjusted for energy content add an additional bite -- up to 25 or 30 cents for methanol and up to 10 cents for propane. 20
Electricity is such a special case that highway taxes play only a minor role compared to vehicle purchase price and battery cost and short life.
Since compressed natural gas pays no Federal highway tax, and State highway taxes on CNG are imposed on a Btu equivalency basis, the net effect of the combined Federal and State taxes on relative economics of alternative fuels compared to each other and compared to gasoline is very significant. Table 4 summarizes the estimated service station pump prices per gallon and per gasoline-equivalent gallon by State. This table shows clearly that the way highway taxes are applied narrows the difference between diesel fuel and gasoline, while among the alternative fuels it favors CNG massively, disfavors LPG somewhat, disfavors LNG considerably, and just about wipes out methanol in most States as a viable economic competitor. The table does not include ethanol as an alternative fuel because it is used almost exclusively as a blending agent with gasoline. With its relatively low energy content, it is disfavored as much as LNG, except in those States with existing tax benefits, as listed in table 2.
The key factors driving these outcomes are the inconsistent Federal highway taxes and the strong tendency in the States to tax on a gallonage basis unadjusted for the fuels' energy contents (except for CNG).
ASSUMPTIONS UNDERLING TABLE 4
To construct table 4, the pretax prices at the service station pump must be estimated. For gasoline, an average price at the refinery rack was assumed to be $0.65 per gallon. An average combined distribution cost and service station markup of $0.209 per gallon was assumed. The pump pretax price would thus be $0.859. With a Federal gasoline tax of $0.141 per gallon, the final pump price, not counting any sales taxes or other local taxes, is $1.00 plus the State gasoline tax. Clearly, the assumptions include the goal of making the calculations as simple as possible, but, in addition, they are based on industry experience. The estimate is consistent with recent data from Energy Information Administration.
This gasoline price is a composite of regular and premium gasolines. Average premium pump price is about 15 cents higher; regular is about 5 cents lower.
For diesel fuel, the starting point is a recent estimate by the Lundberg Letter that the national average pump price was $1.22 per gallon. Subtracting the Federal tax of 20.1 cents and the median State tax of 19 cents per gallon (taken from the Federal Highway Administration report of January 1, 1993) gives an average pretax pump price of $0.829, or $1.03 plus the State tax.
Methanol price at the plant was assumed to be $0.45 per gallon which, with a distribution cost of $0.209 and a Federal tax of 7.1 cents, brings the pump price to $0.73 plus the State tax. Methanol price is currently varying between $0.35 and $0.45 per gallon; a number of studies estimate that a price nearer to $0.45 per gallon is needed to attract project-based investment capital.
An average "city gate" price for natural gas of $3.25 per thousand cubic feet was assumed. 21 This equates to $0.37 per energy-equivalent gallon of gasoline. Adding $0.209 (adjusted to $0.21 for simplicity) for local distribution and service station markup, plus an additional $0.11 per gallon for compression costs brings the pretax pump price to $0.69 per gallon. There is no Federal highway tax.
For liquefied natural gas, the Gas Research Institute has recently released a study of the economics of LNG as a vehicle fuel. 22 This study looked at a number of different potential ways to make and deliver LNG and estimated delivered cost to be anywhere from $0.48 per gallon to $1.03 per gallon, depending on the scale of operation, the location, and the method of liquefaction. For this exercise, we picked the case where LNG is imported and trucked 250 miles to fuel a medium duty fleet; estimated delivered cost is $0.66 per gallon.
An LPG price at the refinery or gas separation plant of $0.40 per gallon was assumed. Adding the standard assumed $0.209 (adjusted to $0.21 for simplicity) for distribution and $0.14 for Federal highway tax brings the price to $0.75 plus the State tax. 23
Except for the methanol FFV, no adjustment has been made for the potential improvements in energy efficiency which might be available from use of engines designed specifically to take advantage of the alternative fuels's characteristics. For the methanol FFV, an assumption of a 12 percent better efficiency on methanol than on gasoline has been made, based on operating experience gained in California on such vehicles over a decade. As a result, the multiplier from gallons of gasoline used is 1.76, instead of 2, the energy content ratio. Potential design efficiencies might reduce the energy equivalent pump price for alternative fuels, including a dedicated methanol vehicle on M100, by as much as 20 percent. Such adjustments were not made for the other fuels because engines designed to take advantage of each fuel's characteristics are not yet available commercially.
All of these assumptions are challengeable for any specific location or specific set of circumstances with unique characteristics. Pump prices vary for a number of reasons not related to taxes. Nonetheless, the assumptions used generate a reasonable starting point from which to compare the impacts of the fuel energy density and other alternative fuel characteristics in combination with the highly variable Federal and State taxes.
The conclusion is inescapable that compressed natural gas, which is taxed at an energy-equivalent rate, benefits the most among the alternative fuels from highway excise taxes, most of which are imposed on a gallonage basis. Methanol, as the contending liquid fuel with the lowest energy content, is the fuel subject to the greatest disadvantage.
TABLE 4. Comparative State-to-State Fuel Prices at the Pump
(First Quarter 1993)
(Cents per Gallon and Cents per Gallon of Gasoline Equivalent)
Gasoline /a/ Diesel Methanol /c/
State $/Gallon $/Gal. $/GGE /b/ $/Gal. $/GGE
_____ ____________ ______ _________ ______ ______
Alabama 1.18 1.22 1.04 0.89 1.56
Alaska 1.08 1.11 0.95 0.73 1.28
Arizona 1.18 1.21 1.03 0.91 1.59
Arkansas 1.19 1.22 1.04 0.92 1.60
California 1.17 1.20 1.02 0.81 1.42
Colorado 1.22 1.24 1.05 0.95 1.66
Connecticut 1.28 1.21 1.03 1.01 1.77
Delaware 1.19 1.22 1.04 0.92 1.61
Dist of Columbia 1.20 1.23 1.05 0.93 1.63
Florida 1.12 1.24 1.06 0.85 1.48
Georgia 1.08 1.11 0.94 0.81 1.41
Hawaii 1.16 1.19 1.01 0.89 1.56
Idaho 1.21 1.24 1.06 0.94 1.65
Illinois 1.19 1.25 1.06 0.92 1.61
Indiana 1.15 1.19 1.01 0.88 1.54
Iowa 1.20 1.26 1.07 0.92 1.61
Kansas 1.18 1.23 1.05 0.93 1.63
Kentucky 1.15 1.15 0.98 0.88 1.54
Louisiana 1.20 1.23 1.05 0.93 1.63
Maine 1.19 1.23 1.05 0.92 1.61
Maryland 1.24 1.25 1.06 0.97 1.69
Massachusetts 1.21 1.24 1.06 0.94 1.65
Michigan 1.15 1.18 1.01 0.88 1.54
Minnesota 1.20 1.23 1.05 0.93 1.63
Mississippi 1.18 1.21 1.03 0.91 1.60
Missouri 1.13 1.16 0.99 0.86 1.51
Montana 1.21 1.24 1.06 0.94 1.65
Nebraska 1.25 1.28 1.09 0.98 1.71
Nevada 1.24 1.30 1.11 0.94 1.64
New Hampshire 1.19 1.22 1.04 0.91 1.59
New Jersey 1.11 1.17 0.99 0.84 1.46
New Mexico 1.17 1.20 1.02 0.89 1.56
New York 1.23 1.28 1.09 0.81 1.42
North Carolina 1.22 1.25 1.07 0.95 1.67
North Dakota 1.17 1.20 1.02 0.90 1.58
Ohio 1.21 1.24 1.06 0.94 1.65
Oklahoma 1.17 1.17 1.00 0.89 1.56
Oregon 1.24 1.27 1.08 0.85 1.49
Pennsylvania 1.22 1.25 1.07 0.85 1.49
Rhode Island 1.26 1.29 1.10 0.99 1.73
South Carolina 1.16 1.19 1.01 0.89 1.56
South Dakota 1.18 1.21 1.03 0.89 1.56
Tennessee 1.20 1.20 1.02 0.93 1.63
Texas 1.20 1.23 1.05 0.93 1.63
Utah 1.19 1.22 1.04 0.92 1.61
Vermont 1.16 1.20 1.02 0.89 1.56
Virginia 1.17 1.19 1.01 0.91 1.58
Washington 1.23 1.26 1.07 0.96 1.68
West Virginia 1.20 1.23 1.05 0.93 1.63
Wisconsin 1.22 1.23 1.07 0.95 1.67
Wyoming 1.09 1.12 0.95 0.78 1.37
[table continued]
CNG /d/ LNG /e/ LPG /f/
$/GGE $/Gal. $/GGE $/Gal. $/GGE
_______ ______________ ______________
Alabama 0.86 0.97 1.49 0.92 1.16
Alaska /g/ /g/ /g/ 0.75 0.95
Arizona 0.70 0.81 1.24 0.93 1.18
Arkansas 0.69 0.80 1.23 0.92 1.16
California 0.76 0.87 1.33 0.81 1.02
Colorado 0.89 1.01 1.54 0.96 1.21
Connecticut 0.97 1.08 1.66 1.03 1.30
Delaware 0.88 0.99 1.52 0.94 1.19
Dist of Columbia 0.89 1.00 1.53 0.95 1.20
Florida 0.81 0.92 1.41 0.88 1.11
Georgia 0.76 0.88 1.34 0.83 1.04
Hawaii /g/ /g/ /g/ 0.86 1.09
Idaho 0.90 1.01 1.55 0.96 1.21
Illinois 0.88 0.99 1.52 0.94 1.19
Indiana 0.84 0.95 1.46 0.90 1.14
Iowa 0.85 0.96 1.47 0.95 1.20
Kansas 0.86 0.97 1.49 0.92 1.16
Kentucky 0.81 0.92 1.41 0.90 1.14
Louisiana 0.89 1.00 1.53 0.95 1.20
Maine 0.88 0.99 1.52 0.93 1.18
Maryland 0.91 1.02 1.56 0.97 1.22
Massachusetts 0.90 1.01 1.55 0.85 1.07
Michigan 0.84 0.95 1.46 0.90 1.14
Minnesota 0.89 1.00 1.53 0.95 1.20
Mississippi 0.87 0.98 1.51 0.92 1.16
Missouri 0.82 0.93 1.43 0.88 1.11
Montana 0.76 0.87 1.34 0.75 0.95
Nebraska 0.94 1.05 1.60 0.99 1.25
Nevada 0.89 1.01 1.54 0.98 1.24
New Hampshire 0.87 0.98 1.50 0.93 1.18
New Jersey 0.74 0.85 1.31 0.80 1.01
New Mexico 0.85 0.96 1.47 0.91 1.15
New York 0.77 0.88 1.35 0.83 1.05
North Carolina 0.91 1.02 1.57 0.97 1.23
North Dakota 0.86 0.97 1.49 0.92 1.16
Ohio 0.90 1.01 1.55 0.96 1.21
Oklahoma 0.85 0.96 1.47 0.92 1.16
Oregon 0.91 1.02 1.56 0.99 1.25
Pennsylvania 0.81 0.92 1.41 0.97 1.23
Rhode Island 0.95 1.06 1.63 1.01 1.28
South Carolina 0.75 0.96 1.47 0.91 1.15
South Dakota 0.87 0.98 1.50 0.91 1.15
Tennessee 0.82 0.93 1.43 0.89 1.12
Texas 0.89 1.00 1.53 0.95 1.20
Utah 0.88 0.99 1.52 0.78 0.99
Vermont 0.85 0.96 1.47 0.75 0.95
Virginia 0.85 0.96 1.47 0.91 1.15
Washington 0.92 1.03 1.58 0.75 0.95
West Virginia 0.89 1.00 1.54 0.95 1.20
Wisconsin 0.91 1.02 1.57 0.97 1.23
Wyoming 0.69 0.80 1.23 0.75 0.95
FOOTNOTES TO TABLE
/a/ Pretax gasoline pump price assumed to be $0.859 per gallon.
/b/ GGE: Gallons of gasoline equivalent (adjusts price for
energy content of the fuel). Pretax pump price for diesel assumed to
be $0.83/gallon.
/c/ Pretax methanol pump price assumed to be $0.659 per gallon.
Methanol FFV assumed to be 12 percent more efficient on methanol than
on gasoline, based on California data.
/d/ Pretax CNG pump price assumed to be $0.69 per gallon at 8.7
gallons per 1000 cubic feet.
/e/ Pretax LNG pump price assumed to be $0.659 per gallon.
/f/ Pretax LPG pump price assumed to be $0.61 per gallon. In
States with fees in lieu of gallonage taxes, an average effective tax
rate has been estimated.
/g/ Alaska and Hawaii have not addressed their tax policy toward
CNG and LNG.
END OF FOOTNOTES TO TABLE
1 For a discussion of these bills and their impacts, see U.S. Library of Congress. Congressional Research Service. Alternative Transportation Fuels: Are They Reducing Oil Imports? Issue Brief No. IB93009.
2 The LUST trust fund is a Federal program that finances the cost of cleaning up spills from underground fuel tanks.
3 Many non-highway uses of motor fuels, such as farm uses or commercial uses in stationary motors and some highway uses of motor fuels such as uses by school districts or State and local governments are tax-free. Some non-highway uses of motor fuels are, however, taxed at varying rates also. The 14.1 cents tax rate on gasoline and special motor fuels generally applies to fuels used in noncommercial motorboats. Fuel used for transportation on inland waterways by commercial cargo vessels is taxed at 15 cents per gallon, rising to 20 cents by 1995 [section 4042]. Fuels used in noncommercial aviation are taxed at either 15.1 cents per gallon [in the case of gasoline, section 4041(c), and section 4081] or 17.6 cents per gallon for jet fuel [section 4041(c), and section 4091].
4 LPG is made up primarily of propane, with varying amounts of propenes, butane, and some minor constituents. In this report, propane and LPG are used interchangeably.
5 Where LPG is sold by weight, the equivalent of a gallon for purposes of computing the motor fuels tax is 4.25 pounds per gallon (see Rev. Rul. 71-464, 1971-2 CB 357).
6 Although under the tax law, blends of gasoline with biomass- derived methanol would also qualify, such blends are disqualified because of the associated increase of emissions of ozone-forming pollutants.
7 In all these cases, the exemption equates to 54 cents per gallon of ethanol used.
8 In the case of the blended fuels, methanol produced from coal or natural gas did not originally qualify for the tax exemptions because in 1977, when the ethanol exemption was first introduced, the Congress believed that the cost of producing methanol from coal and natural gas was low enough without a Federal tax subsidy; whereas, the cost of producing methanol from wood and ethanol from grain was costly and did warrant a subsidy. According to a committee report:
The technology for the production of ethanol from agricultural products and for the production of methanol from forestry products seems to require greater subsidies than for the production of methanol from coal or from urban waste.
See: U.S. Congress. Senate. Finance Committee. Energy Production and Conservation Tax incentive Act. Senate Report No. 95-529 on H.R. 5263, 95th Cong., 1st Sess. Washington, U.S. Govt. Print. Off, 1977. p. 45.
9 This partial exemption has the effect for methanol of equalizing the Federal tax rate to that of gasoline on an energy- content basis.
10 The expiration dates for the motor fuels excise taxes also vary depending on the component of the tax in question. The 2.5 cents portion of the two taxes expires on October 1, 1995. The 0.1 cents LUST tax expires on January 1, 1996. Thus, under current law, the tax rates on gasoline and special fuels will be 11.6 cents between October 1, 1995 and January 1, 1996 and 11.5 cents thereafter; the tax on diesel will be 17.6 cents between October 1, 1995, and January 1, 1996 and 17.5 cents thereafter. The 11.5 cents component of the gasoline tax and the 17.5 cents portion of the diesel tax expire on October 1, 1999. This expiration date was extended by four years under the Intermodal Surface Transportation Efficiency Act of 1991 (P.L. 102-240). It should be noted, however, that the various motor fuels have always had expiration dates, which have always been extended prior to the actual expiration. The excise tax exemptions for alcohol fuels expire on September 30, 2000.
11 One Btu is the amount of heat required to heat one pound of water one Fahrenheit degree.
12 The higher energy density of gasoline and diesel fuel is one of their advantages compared to the alternatives, in that a given storage capacity for fuel leads to a longer driving range per tankful.
13 Lower heating values (LHV) are used throughout this paper. Some authors use higher heating values (HHV). The difference is whether water vapor is calculated as vapor (LHV) or as liquid (HHV). The choice of one or the other does not affect the conclusions in this report. Another cause of differences in heating values used in various sources is that all of these fuels are mixtures whose compositions vary from place to place and time to time.
14 Much of this historical information is taken from: U.S. Library of Congress. Congressional Research Service. Federal Excise Tax on Gasoline and the Highway Trust Fund: A Short History. Report No. 89-174E, by Louis Alan Talley. Washington, March 14, 1989.
15 The Energy Tax Act (ETA) also provided for the gas-guzzler tax, incentives for van pooling, and miscellaneous energy tax provisions. The underlying rationale for the ETA was the perceived failures in the energy markets in allocating resources efficiently and fairly, in coping with the 1973 oil embargo, and in adjusting to the sharp increases in energy prices, the shortages, and the associated adverse economic and social problems.
16 The 1990 OBRA also introduced a new tax credit for small ethanol producers (less than 15 million gallons per year).
17 There has not been a standard definition of Btu equivalency between CNG and gasoline. The equivalency depends on the gas composition, the pressure to which it is compressed, and the gasoline to which it is compared. The National Conference on Weights and Measures has recommended a standard Btu equivalency to gasoline for CNG of 1.14 therms (100 cubic feet at standard atmospheric conditions). The energy content of a therm varies over time by a few percent but averages about 100,000 Btu.
18 New York was the first state to require the licensing of automobiles. By 1917, every state had similar rules. See: Sharp, Ansel M. and Bernard F. Sharp. Public Finance: An Introduction to the Study of the Public Economy. Austin, Texas, Business Publications, Inc., 1970. p. 377.
19 The Road Information Program. 1989 State Highway Funding Methods. p. 20. See also: Bowman, John H. and John L. Mikesell. Recent Changes in State Gasoline Taxation: An Analysis of Structure and Rates. National Tax Journal, v. 36, June, 1983.
20 The precise amount extra depends on the State's gallonage tax and sales tax (if any), the fuel's energy content relative to gasoline, and the vehicle efficiency of fuel use compared to that for gasoline.
21 This estimate is "soft" in that it is highly dependent on how far down the gas pipeline the take-off point is and whether the gas will be priced on an interruptible or noninterruptible (higher price) basis. The closer to the wellhead, the lower this price is likely to be and vice versa. The greater the volume of gas going to vehicles, the greater the likelihood that it will be priced on a noninterruptible basis.
22 Preliminary Assessment of LNG Vehicle Technology, Economics, and Safety Issues. Revision 1). GRI 91/0347. Prepared for GRI by Acurex Environmental Systems Division, Jan. 10, 1992.
23 Retail markups for LPG vary widely. The markup assumed here assumes dealer commitment to a vehicle fuel market.
END OF FOOTNOTES
- AuthorsGushee, David E.Lazzari, Salvatore
- Institutional AuthorsCongressional Research Service
- Index Termsfuel, taxes, studiesfuel, dieseloil and gas taxationfuel, nonconventionalstate taxation, fuel
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 93-9835
- Tax Analysts Electronic Citation93 TNT 195-46