HSB 661 (LSB 6124HC (4) 85)

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 certain special fuel used in motor vehicles. 
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 452A.3, subsection 1, Code 2014, is amended by striking the subsection and inserting in lieu thereof the following:
   1.  a.  Except as otherwise provided in this section and in this division, this subsection shall apply to the excise taxes imposed on each gallon of motor fuel used for any purpose for the privilege of operating motor vehicles in this state. 
   b.  An excise tax is imposed on each gallon of motor fuel in an amount equal to sixteen cents per gallon plus five percent of the sales price charged by the supplier exclusive of the sixteen cents per gallon.
    Sec. 2.  Section 452A.3, subsection 1A, Code 2014, is amended by striking the subsection.
    Sec. 3.  Section 452A.3, subsection 1C, Code 2014, is amended to read as follows:
   1C.  The rate of the excise tax on E-85 gasoline imposed in subsection 1B shall be determined based on the number of gallons of E-85 gasoline that are distributed in this state during the previous calendar year. The department shall determine the actual tax paid for E-85 gasoline for each period beginning January 1 and ending December 31. The amount of the tax paid on E-85 gasoline during the past calendar year shall be compared to the amount of tax on E-85 gasoline that would have been paid using the tax rate for gasoline imposed in subsection 1 or 1A and a difference shall be established. If this difference is equal to or greater than twenty-five thousand dollars, the tax rate for E-85 gasoline for the period beginning July 1 following the end of the determination period shall be the rate in effect as stated in subsection 1 or 1A.
    Sec. 4.  Section 452A.3, subsection 3, Code 2014, is amended to read as follows:
   3.  a.  For the privilege of operating motor vehicles or aircraft in this state, there is imposed an excise tax on the use of special fuel in a motor vehicle or aircraft.
   (1)  The tax rate on special fuel for diesel engines of motor vehicles is twenty-two and one-half an amount equal to eighteen cents per gallon plus five percent of the sales price charged by the supplier exclusive of the eighteen cents per gallon.
   (2)  The rate of tax on special fuel for aircraft is three cents per gallon.
   (3)  On all other special fuel, unless otherwise specified in this section, the per gallon rate is the same as the motor fuel tax.
   b.  Indelible dye meeting United States environmental protection agency and internal revenue service regulations must be added to fuel before or upon withdrawal at a terminal or refinery rack for that fuel to be exempt from tax and the dyed fuel may be used only for an exempt purpose.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill imposes an excise tax on motor fuel and special fuel for diesel engines of motor vehicles that is a combination of a rate per gallon and a percentage of the sales price.
   The current distribution percentage formula for determining the rate of the tax on ethanol blended gasoline and gasoline other than ethanol blended gasoline is due to expire on June 30, 2014. After that date, the tax on all motor fuel will be 20 cents per gallon. The current rate of tax on diesel fuel for motor vehicles is 22.5 cents per gallon.
   Under the bill, effective July 1, 2014, the rate of the excise tax on motor fuel will be 16 cents per gallon plus 5 percent of the sales price charged by the supplier, exclusive of the 16 cents per gallon. The rate of the excise tax on special fuel for diesel engines of motor vehicles will be 18 cents per gallon plus 5 percent of the sales price charged by the supplier, exclusive of the 18 cents per gallon. By operation of law, the rate determined under the bill for motor fuel will also apply to special fuel that is not for diesel engines of motor vehicles or for aircraft, and under specified circumstances, the rate determined under the bill for motor fuel might also be the rate for E-85 gasoline.
   Pursuant to current law and under the bill, fuel taxes are paid by the supplier on the invoiced gross gallonage of motor fuel or special fuel withdrawn from the terminal, then added to the retail price so that the ultimate consumer bears the burden of the tax.