S.F. 2068 Section 1. Section 452A.3, subsection 1A, Code 2014, is 1 amended to read as follows: 2 1A. Except as otherwise provided in this section and in this 3 division , after June 30, 2014, an excise tax of twenty cents is 4 imposed on each gallon of motor fuel used for any purpose for 5 the privilege of operating motor vehicles in this state. The 6 rate shall be determined by the department as follows: 7 a. For the period beginning July 1, 2014, and ending June 8 30, 2015, the rate of the excise tax shall be the amount 9 calculated by applying the percentage change in the consumer 10 price index for all urban consumers for the twelve-month period 11 commencing April 1, 2013, as published in the federal register 12 by the United States department of labor, bureau of labor 13 statistics, to twenty cents, rounded to the nearest one-half of 14 a cent. For purposes of this paragraph “a” , if the percentage 15 change is zero or less, the rate in effect for the period 16 beginning July 1, 2014, and ending June 30, 2015, shall be 17 twenty cents. 18 b. Beginning July 1, 2015, and annually on July 1 19 thereafter, the rate of the excise tax shall be the amount 20 calculated by applying to the amount of the excise tax in 21 effect on the preceding June 30, as an increase or decrease, 22 the percentage change in the consumer price index for all urban 23 consumers for the twelve-month period commencing April 1 of the 24 calendar year preceding the calendar year in which the rate 25 determined under this paragraph takes effect, as published in 26 the federal register by the United States department of labor, 27 bureau of labor statistics, rounded to the nearest one-half of 28 a cent. 29 Sec. 2. 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 b. The tax rate on special fuel for diesel engines of motor 35 -1- LSB 5377XS (5) 85 dea/sc 1/ 4

S.F. 2068 vehicles is twenty-two and one-half cents per gallon shall be 1 determined by the department as follows: 2 (1) For the period beginning July 1, 2014, and ending June 3 30, 2015, the rate of the tax shall be the amount calculated 4 by applying the percentage change in the consumer price index 5 for all urban consumers for the twelve-month period commencing 6 April 1, 2013, as published in the federal register by the 7 United States department of labor, bureau of labor statistics, 8 to twenty-two and one-half cents, rounded to the nearest 9 one-half of a cent . For purposes of this subparagraph (1), if 10 the percentage change is zero or less, the rate in effect for 11 the period beginning July 1, 2014, and ending June 30, 2015, 12 shall be twenty-two and one-half cents. 13 (2) Beginning July 1, 2015, and annually on July 1 14 thereafter, the rate of the excise tax on each gallon of 15 special fuel for diesel engines of motor vehicles shall be the 16 amount calculated by applying to the amount of the excise tax 17 in effect on the preceding June 30, as an increase or decrease, 18 the percentage change in the consumer price index for all urban 19 consumers for the twelve-month period commencing April 1 of the 20 calendar year preceding the calendar year in which the rate 21 determined under this subparagraph takes effect, as published 22 in the federal register by the United States department of 23 labor, bureau of labor statistics, rounded to the nearest 24 one-half of a cent. 25 (3) The rate of tax on special fuel for aircraft is three 26 cents per gallon. 27 (4) On all other special fuel, unless otherwise specified in 28 this section , the per gallon rate is the same as the motor fuel 29 tax. 30 c. Indelible dye meeting United States environmental 31 protection agency and internal revenue service regulations must 32 be added to fuel before or upon withdrawal at a terminal or 33 refinery rack for that fuel to be exempt from tax and the dyed 34 fuel may be used only for an exempt purpose. 35 -2- LSB 5377XS (5) 85 dea/sc 2/ 4

S.F. 2068 Sec. 3. Section 452A.3, Code 2014, is amended by adding the 1 following new subsection: 2 NEW SUBSECTION . 8. Annually by May 31, the director 3 shall cause an advisory notice to be published in the Iowa 4 administrative bulletin and in a newspaper of general 5 circulation in this state, stating the rate of taxes to be in 6 effect on or after July 1 of the same year, as established 7 pursuant to subsection 1A, subsection 1C if applicable, and 8 subsection 3, paragraph “b” , subparagraphs (1), (2), and (4). 9 The publication of the rate of tax by the director is exempt 10 from chapter 17A. 11 Sec. 4. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 12 immediate importance, takes effect upon enactment. 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 provides for the determination of the rates of 17 the excise taxes on motor fuel and special fuel used in diesel 18 engines of motor vehicles based on changes in the consumer 19 price index (CPI). 20 Currently, the rate of the excise tax on a gallon of motor 21 fuel is linked to the distribution percentage of ethanol 22 blended gasoline and fuel other than ethanol blended gasoline 23 sold in this state, but beginning July 1, 2014, the tax rate 24 for both ethanol blended gasoline and motor fuel other than 25 ethanol blended gasoline will be 20 cents per gallon. The 26 current rate of the excise tax on special fuel for diesel 27 engines of motor vehicles is 22.5 cents per gallon. 28 The bill provides that for the period beginning July 1, 29 2014, and ending June 30, 2015, the rate of the excise tax on 30 motor fuel —— both ethanol blended gasoline and fuel other 31 than ethanol blended gasoline —— will be the amount calculated 32 by applying the percentage change in the CPI for all urban 33 consumers for the 12-month period commencing April 1, 2013, 34 as published in the federal register by the United States 35 -3- LSB 5377XS (5) 85 dea/sc 3/ 4

S.F. 2068 department of labor, bureau of labor statistics, to 20 cents, 1 rounded to the nearest one-half of a cent. However, if the 2 percentage change in the CPI is zero or less, the rate of the 3 tax will remain at 20 cents. For the period beginning July 4 1, 2014, and ending June 30, 2015, the rate of the excise tax 5 on special fuel for diesel engines of motor vehicles will be 6 the amount calculated by applying the percentage change in 7 the CPI to 22.5 cents, rounded to the nearest one-half of a 8 cent. However, if the percentage change in the CPI is zero 9 or less, the rate of the tax will remain at 22.5 cents. By 10 operation of law, the rate determined under the bill for motor 11 fuel is also the rate for special fuel that is not for diesel 12 engines of motor vehicles or for aircraft, and under specified 13 circumstances, the rate determined under the bill for motor 14 fuel may also be the rate for E-85 gasoline. 15 Beginning July 1, 2015, and annually on July 1 thereafter, 16 the rate of the excise tax on a gallon of motor fuel or on a 17 gallon of special fuel used in diesel engines of motor vehicles 18 will be the amount calculated by applying, as an increase or 19 decrease, the percentage change in the CPI for the 12-month 20 period commencing April 1 of the previous year to the amount 21 of the applicable excise tax in effect on June 30 immediately 22 preceding the effective date of the new tax rate. 23 The bill requires the director of revenue to have an advisory 24 notice published in the Iowa administrative bulletin and in 25 a newspaper of general circulation in the state by May 31 26 annually stating the rate of the taxes on motor fuel, special 27 fuel for diesel engines of motor vehicles, and other affected 28 fuels to be in effect the following July 1. 29 The bill takes effect upon enactment. 30 -4- LSB 5377XS (5) 85 dea/sc 4/ 4