House File 83 - Introduced HOUSE FILE 83 BY SHEETS A BILL FOR An Act providing for an excise tax on motor fuel and special 1 fuel used in motor vehicles based on the wholesale price of 2 the fuel and including effective date provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 1204HH (2) 86 ns/sc

H.F. 83 Section 1. Section 452A.3, subsection 1, Code 2015, 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 2, Code 2015, is amended 20 by striking the subsection. 21 Sec. 3. Section 452A.3, subsection 4, Code 2015, is amended 22 to read as follows: 23 4. The rate of the excise tax on E-85 gasoline imposed in 24 subsection 3 shall be determined based on the number of gallons 25 of E-85 gasoline that are distributed in this state during the 26 previous calendar year. The department shall determine the 27 actual tax paid for E-85 gasoline for each period beginning 28 January 1 and ending December 31. The amount of the tax paid on 29 E-85 gasoline during the past calendar year shall be compared 30 to the amount of tax on E-85 gasoline that would have been paid 31 using the tax rate for gasoline imposed in subsection 1 or 32 2 and a difference shall be established. If this difference 33 is equal to or greater than twenty-five thousand dollars, the 34 tax rate for E-85 gasoline for the period beginning July 1 35 -1- LSB 1204HH (2) 86 ns/sc 1/ 4

H.F. 83 following the end of the determination period shall be the rate 1 in effect as stated in subsection 1 or 2 . 2 Sec. 4. Section 452A.3, subsection 6, Code 2015, is amended 3 to read as follows: 4 6. 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 1204HH (2) 86 ns/sc 2/ 4

H.F. 83 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, and beginning July 1, 2015, 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 1204HH (2) 86 ns/sc 3/ 4

H.F. 83 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 1204HH (2) 86 ns/sc 4/ 4