House File 2414 - Introduced HOUSE FILE 2414 BY SHEETS A BILL FOR An Act providing for excise taxes on motor fuel and special 1 fuel used in motor vehicles to be based on the wholesale 2 price of the fuel, and including effective date provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5925YH (6) 85 dea/sc

H.F. 2414 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. Except as otherwise provided in this section and in 4 this division, this subsection shall apply to the excise tax 5 imposed on each gallon of motor fuel used for any purpose for 6 the privilege of operating motor vehicles in this state. The 7 rate of the excise tax shall be a percentage of the sales price 8 of motor fuel distributed in the state. The rate shall be 9 established by the department on the effective date of this 10 Act by calculating the percentage of the wholesale price of 11 a gallon of motor fuel that represents an amount equivalent 12 to the amount of revenue produced by a tax rate of twenty 13 cents per gallon, rounded to the nearest one-half of one 14 percent. For purposes of this subsection, the wholesale price 15 of motor fuel shall be the price reported for the midwest 16 in the most recent weekly price report issued by the United 17 States department of energy, United States energy information 18 administration, as of the effective date of this Act. 19 Sec. 2. Section 452A.3, subsection 1A, Code 2014, is amended 20 by striking the subsection. 21 Sec. 3. Section 452A.3, subsection 1C, Code 2014, is amended 22 to read as follows: 23 1C. The rate of the excise tax on E-85 gasoline imposed 24 in subsection 1B shall be determined based on the number of 25 gallons of E-85 gasoline that are distributed in this state 26 during the previous calendar year. The department shall 27 determine the actual tax paid for E-85 gasoline for each period 28 beginning January 1 and ending December 31. The amount of 29 the tax paid on E-85 gasoline during the past calendar year 30 shall be compared to the amount of tax on E-85 gasoline that 31 would have been paid using the tax rate for gasoline imposed 32 in subsection 1 or 1A and a difference shall be established. 33 If this difference is equal to or greater than twenty-five 34 thousand dollars, the tax rate for E-85 gasoline for the period 35 -1- LSB 5925YH (6) 85 dea/sc 1/ 4

H.F. 2414 beginning July 1 following the end of the determination period 1 shall be the rate in effect as stated in subsection 1 or 1A . 2 Sec. 4. Section 452A.3, subsection 3, Code 2014, is amended 3 to read as follows: 4 3. a. For the privilege of operating motor vehicles or 5 aircraft in this state, there is imposed an excise tax on the 6 use of special fuel in a motor vehicle or aircraft . The tax 7 rate on special fuel for diesel engines of motor vehicles is 8 twenty-two and one-half cents per gallon. as follows: 9 (1) The rate of the excise tax on special fuel for diesel 10 engines of motor vehicles shall be a percentage of the sales 11 price of diesel fuel distributed in the state. The rate shall 12 be established by the department on the effective date of this 13 Act by calculating the percentage of the wholesale price of 14 a gallon of diesel fuel that represents an amount equivalent 15 to the amount of revenue produced by a tax rate of twenty-two 16 and one-half cents per gallon, rounded to the nearest one-half 17 of one percent. For purposes of this subparagraph, the 18 wholesale price of diesel fuel shall be the price reported for 19 the midwest in the most recent weekly price report issued by 20 the United States department of energy, United States energy 21 information administration, as of the effective date of this 22 Act. 23 (2) The rate of tax on special fuel for aircraft is three 24 cents per gallon. 25 (3) On all other special fuel, unless otherwise specified in 26 this section , the per gallon rate is the same as the motor fuel 27 tax. 28 b. Indelible dye meeting United States environmental 29 protection agency and internal revenue service regulations must 30 be added to fuel before or upon withdrawal at a terminal or 31 refinery rack for that fuel to be exempt from tax and the dyed 32 fuel may be used only for an exempt purpose. 33 Sec. 5. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 34 immediate importance, takes effect upon enactment. 35 -2- LSB 5925YH (6) 85 dea/sc 2/ 4

H.F. 2414 EXPLANATION 1 The inclusion of this explanation does not constitute agreement with 2 the explanation’s substance by the members of the general assembly. 3 Currently, the rate of the excise tax on a gallon of motor 4 fuel is linked to the distribution percentage of ethanol 5 blended gasoline and fuel other than ethanol blended gasoline 6 sold in this state, but beginning July 1, 2014, the tax rate 7 for both ethanol blended gasoline and motor fuel other than 8 ethanol blended gasoline will be 20 cents per gallon. The 9 current rate of the excise tax on special fuel for diesel 10 engines of motor vehicles is 22.5 cents per gallon. 11 This bill replaces the current per-gallon tax rates on motor 12 fuel and special fuel for diesel engines of motor vehicles with 13 tax rates expressed as a percentage of the sales price. 14 The new motor fuel tax rate established in the bill will 15 be a percentage of the wholesale price of a gallon of motor 16 fuel that represents an amount per gallon that is equivalent 17 to the amount of revenue produced by the current tax rate of 20 18 cents per gallon, rounded to the nearest one-half of 1 percent. 19 The new rate will be established on the effective date of the 20 Act, based on the wholesale price reported for the midwest 21 in the most recent weekly price report issued by the United 22 States energy information administration as of that date. By 23 operation of law, the rate determined under the bill for motor 24 fuel is also the rate for special fuel that is not for diesel 25 engines of motor vehicles or for aircraft, and under specified 26 circumstances, the rate determined under the bill for motor 27 fuel may also be the rate for E-85 gasoline. 28 The new tax rate for special fuel for diesel engines of motor 29 vehicles will be established on the effective date of the Act 30 in the same manner as the tax rate for motor fuel. The rate is 31 a percentage of the wholesale price of a gallon of diesel fuel 32 that represents an amount equivalent to the amount of revenue 33 produced by the current tax rate of 22.5 cents per gallon, 34 rounded to the nearest one-half of 1 percent. The wholesale 35 -3- LSB 5925YH (6) 85 dea/sc 3/ 4

H.F. 2414 price is the price reported for the midwest in the most 1 recent weekly price report issued by the United States energy 2 information administration as of the effective date of the Act. 3 The bill takes effect upon enactment. 4 -4- LSB 5925YH (6) 85 dea/sc 4/ 4