House Study Bill 661 - Introduced HOUSE FILE _____ BY (PROPOSED COMMITTEE ON TRANSPORTATION BILL BY CHAIRPERSON BYRNES) A BILL FOR An Act relating to the rate of the excise tax on motor fuel and 1 certain special fuel used in motor vehicles. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 6124HC (4) 85 dea/sc

H.F. _____ Section 1. Section 452A.3, subsection 1, Code 2014, is 1 amended by striking the subsection and inserting in lieu 2 thereof the following: 3 1. a. Except as otherwise provided in this section and in 4 this division, this subsection shall apply to the excise taxes 5 imposed on each gallon of motor fuel used for any purpose for 6 the privilege of operating motor vehicles in this state. 7 b. An excise tax is imposed on each gallon of motor fuel in 8 an amount equal to sixteen cents per gallon plus five percent 9 of the sales price charged by the supplier exclusive of the 10 sixteen cents per gallon. 11 Sec. 2. Section 452A.3, subsection 1A, Code 2014, is amended 12 by striking the subsection. 13 Sec. 3. Section 452A.3, subsection 1C, Code 2014, is amended 14 to read as follows: 15 1C. The rate of the excise tax on E-85 gasoline imposed 16 in subsection 1B shall be determined based on the number of 17 gallons of E-85 gasoline that are distributed in this state 18 during the previous calendar year. The department shall 19 determine the actual tax paid for E-85 gasoline for each period 20 beginning January 1 and ending December 31. The amount of 21 the tax paid on E-85 gasoline during the past calendar year 22 shall be compared to the amount of tax on E-85 gasoline that 23 would have been paid using the tax rate for gasoline imposed 24 in subsection 1 or 1A and a difference shall be established. 25 If this difference is equal to or greater than twenty-five 26 thousand dollars, the tax rate for E-85 gasoline for the period 27 beginning July 1 following the end of the determination period 28 shall be the rate in effect as stated in subsection 1 or 1A . 29 Sec. 4. Section 452A.3, subsection 3, Code 2014, is amended 30 to read as follows: 31 3. a. For the privilege of operating motor vehicles or 32 aircraft in this state, there is imposed an excise tax on the 33 use of special fuel in a motor vehicle or aircraft. 34 (1) The tax rate on special fuel for diesel engines of motor 35 -1- LSB 6124HC (4) 85 dea/sc 1/ 3

H.F. _____ vehicles is twenty-two and one-half an amount equal to eighteen 1 cents per gallon plus five percent of the sales price charged 2 by the supplier exclusive of the eighteen cents per gallon . 3 (2) The rate of tax on special fuel for aircraft is three 4 cents per gallon. 5 (3) On all other special fuel, unless otherwise specified in 6 this section , the per gallon rate is the same as the motor fuel 7 tax. 8 b. Indelible dye meeting United States environmental 9 protection agency and internal revenue service regulations must 10 be added to fuel before or upon withdrawal at a terminal or 11 refinery rack for that fuel to be exempt from tax and the dyed 12 fuel may be used only for an exempt purpose. 13 EXPLANATION 14 The inclusion of this explanation does not constitute agreement with 15 the explanation’s substance by the members of the general assembly. 16 This bill imposes an excise tax on motor fuel and special 17 fuel for diesel engines of motor vehicles that is a combination 18 of a rate per gallon and a percentage of the sales price. 19 The current distribution percentage formula for determining 20 the rate of the tax on ethanol blended gasoline and gasoline 21 other than ethanol blended gasoline is due to expire on June 22 30, 2014. After that date, the tax on all motor fuel will be 20 23 cents per gallon. The current rate of tax on diesel fuel for 24 motor vehicles is 22.5 cents per gallon. 25 Under the bill, effective July 1, 2014, the rate of the 26 excise tax on motor fuel will be 16 cents per gallon plus 5 27 percent of the sales price charged by the supplier, exclusive 28 of the 16 cents per gallon. The rate of the excise tax on 29 special fuel for diesel engines of motor vehicles will be 18 30 cents per gallon plus 5 percent of the sales price charged 31 by the supplier, exclusive of the 18 cents per gallon. By 32 operation of law, the rate determined under the bill for motor 33 fuel will also apply to special fuel that is not for diesel 34 engines of motor vehicles or for aircraft, and under specified 35 -2- LSB 6124HC (4) 85 dea/sc 2/ 3

H.F. _____ circumstances, the rate determined under the bill for motor 1 fuel might also be the rate for E-85 gasoline. 2 Pursuant to current law and under the bill, fuel taxes are 3 paid by the supplier on the invoiced gross gallonage of motor 4 fuel or special fuel withdrawn from the terminal, then added to 5 the retail price so that the ultimate consumer bears the burden 6 of the tax. 7 -3- LSB 6124HC (4) 85 dea/sc 3/ 3