Pennsylvania Bureau of Motor Fuels Tax
Transcript of Pennsylvania Bureau of Motor Fuels Tax
Alternative Fuels IFTA Attorneys Section
Jack Frehafer
Pennsylvania Department of Revenue
Office of Chief Counsel
Topics Alternative Fuels (“Special Fuels”) Overview
CNG
LNG
Propane
Hydrogen
E-85
Biodiesel…Not?
Energy Equivalence
Electricity
Taxation Challenges
IFTA Implications
Top 10 Energy-Producing States, 2016
RANK STATE ENERGY PRODUCED
(trillions BTU)
1 Texas 17,080
2 Pennsylvania 7,888
3 Wyoming 7,518
4 Oklahoma 4,005
5 West Virginia 3,785
6 North Dakota 3,498
7 Colorado 3,078
8 New Mexico 2,582
9 Louisiana 2,555
10 California 2,431
Most familiar liquid alternative fuel
Not used in heavy trucks
85% Ethanol, 15% regular gasoline
Superior emissions performance at the cost of
slightly decreased energy performance
E-85 {Ethanol 85%; Flex Fuel}
E-85
Superior emissions, slightly less power
efficiency compared to Gasoline
Mostly limited to passenger vehicles
Requires bulky and heavy storage tank, which
limits vehicle cargo capacity
CNG – Compressed Natural Gas
CNG – Slow Fill, Fast Fill
CNG – Sold by the GGE
Currently used only in heavy trucks
Requires special handling – fuel exists at
minus 260F
Bulky and heavy propulsion tanks on truck
Lack of long-range refueling infrastructure
LNG – Liquefied Natural Gas
Diesel Gallon Equivalent {DGE}
Concept: Alternative Fuel is sold in measured units that
provide the same energy efficiency as regular clear diesel
fuel.
For example, it takes 1.7 liquid gallons of LNG to equal the
energy efficiency of one gallon of clear diesel fuel.
Accordingly, “1” DGE of LNG contains 1.7 gallons of
LNG.
Pump prices for LNG are displayed in DGE.
Therefore, if the diesel price is $3.50 per gallon and the
LNG price is $2.90 per gallon, then the LNG is a better buy
for the money.
LNG – Sold
by the DGE
Traditionally, the oldest and most common alternative
fuel, until recently overtaken by CNG.
Good emissions performance; average energy/power
performance below gasoline’s performance.
Often used by light and medium weight trucks
Point-of-taxation generally limited to dealer-user
(retail).
Propane {LPG}
Propane
Extremely efficient fuel
Bulky propulsion tanks required
Not generally seen in heavy vehicles
Sales lagging expectations; major automakers
may reduce production of these vehicles
Infrastructure issues
Bulkiest on-board storage tank equipment
High cost of fuel
Hydrogen
Best fuel efficiency and emissions
performance of all fuels.
Costs of electric vehicles are declining
Point of taxation generally limited to dealer-
user (retail)
Presents a huge challenge to the very concept
of “motor carriers road tax.”
Electricity
Electric Cars
Nissan Leaf
BMW i8
Electric Charging Stations
Pennsylvania’s 2019 Fuel Tax Rates
Gasoline Tax Rate: 192.5 Mills x $2.99 AWP = $0.576
Alt Fuel Tax Rate: (BTU Value ÷ 114,500 Gasoline BTU Value) x
0.576 = AFT
Alternative Fuel BTU Value Alternative Fuels Tax Rate
• Propane 84,250 $0.425
• E-85 82,056 $0.413
• LNG (DGE) 128,714 $0.648
• CNG (GGE) 114,500 $0.576
• Electricity (kWh) 3,414 $0.0172
Electric Vehicle Road Fee {EVRF}
(a) Efficiency-based Rate
Fuel Efficiency-based Formula
(FHWA average miles ÷ MPGe) x Gasoline tax rate
Example Efficiency-based Fee Calculation
(11,398 ÷ 100 MPGe) x $0.576 = $65.65 per year
Electric Vehicle Road Fee {EVRF}
(b) Road Use-based Rate
Basic road use formula
(FHWA average miles ÷ Average Vehicle MPG)
x Gasoline tax rate
Example EVRF-RU Calculation
(11,398 ÷ 26 MPG) X $0.576 = $252.51 per year
So, how should we be
imposing tax on the
use of Alternative Fuels
by IFTA QMVs?
Statutory and Constitutional Concerns
• Constitutional limitations: Interstate Commerce
Clause, Uniformity of Taxation on a Class of Subjects
• Double taxation
• Imposition of a “Fee” vs a “Tax”
• IFTA enabling statutes, by Jurisdiction
Road Use Revenues – Collection Options
• Tax on the fuel use or sale
• Vehicle registration fee
• Vehicle Miles Traveled (VMT)
• Hybrid approaches
Option 1: Tax on Fuel Use or Sale
• Familiar concept for all parties involved
• Requires only minor adjustments to current
IFTA reporting process
• Uncertainties involving availability of
purchase and usage data
Option 2: Registration Fees
• Simple solution to guarantee revenues
• How does the jurisdiction apportion fees?
• Likely requires jurisdiction-level statutory
changes
• Possible constitutional and uniformity issues
• Is it consistent with the concept of imposing
and collecting revenues based on road use?
Option 3: Vehicle Miles Traveled {VMT}
• Paradigm-shift required, changes to current
IFTA framework
• Effectively requires 100% buy-in by all
jurisdictions
• Requires advanced monitoring technology, and
reporting
Option 4: Hybrid or other Solutions?
• Combine the most effective and compatible
features of Options #1, #2, and #3
• Other ideas?
IFTA Enabling Legislation Example
75 Pa.C.S. § 9622: Provide for the cooperation and
assistance among jurisdictions in the administration,
collection and enforcement of motor carriers road tax and
similar taxes of other jurisdictions, including, but not limited
to:
(1) Base-state jurisdiction over tax reporting, licensing and
collections.
(3) Provisions for the transfer of funds collected to other
jurisdictions.
(4) Assessment and collection by the base state of tax,
penalties and interest owed to other member jurisdictions.
(9) Issuance of refunds or credits.
JURISDICTION A JURISDICTION B JURISDICTION C
100 Miles 100 Miles 100 Miles
50 Miles 50 Miles 50 Miles
Apportionment Example
Apportionment Conflict ?
“Fuel taxes” are designed to impose a tax on the purchase
of fuel. Purchases of fuel, and the imposition of tax, are
made in direct relation to actual vehicle road use.
Electric vehicles will require adjustments to most
jurisdictions’ fuel tax imposition rules.
Fixed Vehicle-Registration-Fees make apportionment of
road taxes among the jurisdictions complicated at best.
Unless carefully designed incorporating variable factors,
it is possible these fees may not be compatible, practically
or legally, with the imposition of a motor carrier road tax.
Summary of Issues
Constitutional, Uniformity, and IFTA Compatibility
issues must be considered in the design of alternative fuel
taxing schemes.
Flexibility in designing Point-of-Taxation rules for
Electricity and Propane is very limited, i.e., the
dealer/user point-of-taxation is practically mandated.
Solutions may come from:
Tax Administrators
Legislatures
Industry
Summary of Issues
QUESTIONS ?