SF 2068 (LSB 5377XS (5) 85)

SENATE FILE 2068

BY  CHELGREN

A BILL FOR

An Act requiring the rates of the excise taxes on motor fuel and certain special fuel used in motor vehicles to be based on changes in the consumer price index and including effective date provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 452A.3, subsection 1A, Code 2014, is amended to read as follows:
   1A.  Except as otherwise provided in this section and in this division, after June 30, 2014, an excise tax of twenty cents is imposed on each gallon of motor fuel used for any purpose for the privilege of operating motor vehicles in this state.  The rate shall be determined by the department as follows:
   a.  For the period beginning July 1, 2014, and ending June 30, 2015, the rate of the excise tax shall be the amount calculated by applying the percentage change in the consumer price index for all urban consumers for the twelve-month period commencing April 1, 2013, as published in the federal register by the United States department of labor, bureau of labor statistics, to twenty cents, rounded to the nearest one-half of a cent. For purposes of this paragraph “a”, if the percentage change is zero or less, the rate in effect for the period beginning July 1, 2014, and ending June 30, 2015, shall be twenty cents.
   b.  Beginning July 1, 2015, and annually on July 1 thereafter, the rate of the excise tax shall be the amount calculated by applying to the amount of the excise tax in effect on the preceding June 30, as an increase or decrease, the percentage change in the consumer price index for all urban consumers for the twelve-month period commencing April 1 of the calendar year preceding the calendar year in which the rate determined under this paragraph takes effect, as published in the federal register by the United States department of labor, bureau of labor statistics, rounded to the nearest one-half of a cent.
    Sec. 2.  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.
   b.  The tax rate on special fuel for diesel engines of motor vehicles is twenty-two and one-half cents per gallon shall be determined by the department as follows:
   (1)  For the period beginning July 1, 2014, and ending June 30, 2015, the rate of the tax shall be the amount calculated by applying the percentage change in the consumer price index for all urban consumers for the twelve-month period commencing April 1, 2013, as published in the federal register by the United States department of labor, bureau of labor statistics, to twenty-two and one-half cents, rounded to the nearest one-half of a cent.  For purposes of this subparagraph (1), if the percentage change is zero or less, the rate in effect for the period beginning July 1, 2014, and ending June 30, 2015, shall be twenty-two and one-half cents.
   (2)  Beginning July 1, 2015, and annually on July 1 thereafter, the rate of the excise tax on each gallon of special fuel for diesel engines of motor vehicles shall be the amount calculated by applying to the amount of the excise tax in effect on the preceding June 30, as an increase or decrease, the percentage change in the consumer price index for all urban consumers for the twelve-month period commencing April 1 of the calendar year preceding the calendar year in which the rate determined under this subparagraph takes effect, as published in the federal register by the United States department of labor, bureau of labor statistics, rounded to the nearest one-half of a cent.
   (3)  The rate of tax on special fuel for aircraft is three cents per gallon.
   (4)  On all other special fuel, unless otherwise specified in this section, the per gallon rate is the same as the motor fuel tax.
   c.  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.
    Sec. 3.  Section 452A.3, Code 2014, is amended by adding the following new subsection:
   NEW SUBSECTION.  8.  Annually by May 31, the director shall cause an advisory notice to be published in the Iowa administrative bulletin and in a newspaper of general circulation in this state, stating the rate of taxes to be in effect on or after July 1 of the same year, as established pursuant to subsection 1A, subsection 1C if applicable, and subsection 3, paragraph “b”, subparagraphs (1), (2), and (4). The publication of the rate of tax by the director is exempt from chapter 17A.
    Sec. 4.  EFFECTIVE UPON ENACTMENT.  This Act, being deemed of immediate importance, takes effect upon enactment.
EXPLANATION
The inclusion of this explanation does not constitute agreement with

the explanation’s substance by the members of the general assembly.
   This bill provides for the determination of the rates of the excise taxes on motor fuel and special fuel used in diesel engines of motor vehicles based on changes in the consumer price index (CPI).
   Currently, the rate of the excise tax on a gallon of motor fuel is linked to the distribution percentage of ethanol blended gasoline and fuel other than ethanol blended gasoline sold in this state, but beginning July 1, 2014, the tax rate for both ethanol blended gasoline and motor fuel other than ethanol blended gasoline will be 20 cents per gallon. The current rate of the excise tax on special fuel for diesel engines of motor vehicles is 22.5 cents per gallon.
   The bill provides that for the period beginning July 1, 2014, and ending June 30, 2015, the rate of the excise tax on motor fuel —— both ethanol blended gasoline and fuel other than ethanol blended gasoline —— will be the amount calculated by applying the percentage change in the CPI for all urban consumers for the 12-month period commencing April 1, 2013, as published in the federal register by the United States department of labor, bureau of labor statistics, to 20 cents, rounded to the nearest one-half of a cent. However, if the percentage change in the CPI is zero or less, the rate of the tax will remain at 20 cents. For the period beginning July 1, 2014, and ending June 30, 2015, the rate of the excise tax on special fuel for diesel engines of motor vehicles will be the amount calculated by applying the percentage change in the CPI to 22.5 cents, rounded to the nearest one-half of a cent. However, if the percentage change in the CPI is zero or less, the rate of the tax will remain at 22.5 cents. By operation of law, the rate determined under the bill for motor fuel is also the rate for 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 may also be the rate for E-85 gasoline.
   Beginning July 1, 2015, and annually on July 1 thereafter, the rate of the excise tax on a gallon of motor fuel or on a gallon of special fuel used in diesel engines of motor vehicles will be the amount calculated by applying, as an increase or decrease, the percentage change in the CPI for the 12-month period commencing April 1 of the previous year to the amount of the applicable excise tax in effect on June 30 immediately preceding the effective date of the new tax rate.
   The bill requires the director of revenue to have an advisory notice published in the Iowa administrative bulletin and in a newspaper of general circulation in the state by May 31 annually stating the rate of the taxes on motor fuel, special fuel for diesel engines of motor vehicles, and other affected fuels to be in effect the following July 1.
   The bill takes effect upon enactment.