Date Requested:March 06, 2013
Time Requested:04:04 PM
Agency: State Tax & Revenue Department
CBD Number: Version: Bill Number: Resolution Number:
2013R2535 Introduced SB454
CBD Subject: TAX ON ALTERNATIVE FUELS
FUND(S)
State Road Fund
Sources of Revenue
Other Fund State Road Fund
Legislation creates:
Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

     The stated purpose of this bill is to provide a framework for computation, payment and reporting of the Motor Fuel Excise Tax on alternative fuels.
    
     As written, the passage of this bill provides a mechanism for collection of alternative fuels under the Motor Fuel Excise Tax beginning on January 1, 2014. The bill defines “alternative fuel” as products commonly known as butane, propane, compressed natural gas, liquefied natural gas, liquefied petroleum gas, natural gas hydrocarbons and derivatives, among others, but does not include electricity. As more modern vehicles are being produced that use other forms of fuel besides gasoline and diesel, the passage of this bill allows for greater stability for State Road Fund revenue. Under current law, the use of these “alternative fuels” in an internal combustion engine for on-road use are generally taxable under the Motor Fuel Excise Tax. However, there are no rules in place to properly administer such taxes on fuel not sold at the terminal rack. The bill requires a “gallon equivalent” base unit so that alternative fuels are taxed at the equivalent unit as motor fuel. This bill provides a method for maintaining current Motor Fuel Excise Tax revenue within the State Road Fund in future years as the growth in alternative fuel vehicles become more significant within the State.
    
     Additional administrative costs to the State Tax Department would be $31,400 in FY2014 to implement the tax on alternative fuel. There would be no additional administrative costs thereafter.

Fiscal Note Detail
Over-all effect
Effect of Proposal Fiscal Year
2013
Increase/Decrease
(use"-")
2014
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 31,400 0
Personal Services 0 15,000 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 16,400 0
2. Estimated Total Revenues 0 0 0
3. Explanation of above estimates (including long-range effect):
     As written, the passage of this bill provides a mechanism for collection of alternative fuels under the Motor Fuel Excise Tax beginning on January 1, 2014. The bill defines “alternative fuel” as products commonly known as butane, propane, compressed natural gas, liquefied natural gas, liquefied petroleum gas, natural gas hydrocarbons and derivatives, among others, but does not include electricity. As more modern vehicles are being produced that use other forms of fuel besides gasoline and diesel, the passage of this bill allows for greater stability for State Road Fund revenue. Under current law, the use of these “alternative fuels” in an internal combustion engine for on-road use are generally taxable under the Motor Fuel Excise Tax. However, there are no rules in place to properly administer such taxes on fuel not sold at the terminal rack. The bill requires a “gallon equivalent” base unit so that alternative fuels are taxed at the equivalent unit as motor fuel. This bill provides a method for maintaining current Motor Fuel Excise Tax revenue within the State Road Fund in future years as the growth in alternative fuel vehicles become more significant within the State.
    
     Additional administrative costs to the State Tax Department would be $31,400 in FY2014 to implement the tax on alternative fuel. There would be no additional administrative costs thereafter.
    


Memorandum
Person submitting Fiscal Note:
Mark B. Muchow
Email Address:
Roger.D.Cox@wv.gov
     The stated purpose of this bill is to provide a framework for computation, payment and reporting of the Motor Fuel Excise Tax on alternative fuels.
    
     One of the objectives of the proposed bill is to have a separate wholesale price calculation for alternative fuels. However, the language of this bill fails to adequately exclude alternative fuels from the current wholesale price calculation for gasoline and diesel fuels.