Rates of Tax on Aviation Gasoline and Jet Fuel for 2015; Oil Company Franchise Tax Rate for 2015; Alternative Fuels Tax Rates for 2015
[44 Pa.B. 7799]
[Saturday, December 13, 2014]
I. Aviation Gasoline and Jet Fuels
A. Aviation Gasoline Rate for 2015
Under 74 Pa.C.S. § 6121(b) (relating to tax on aviation fuels), the Secretary of Revenue (Secretary) announces that for calendar year 2015 the rate of tax on aviation gasoline and all other liquid fuels used or sold and delivered by distributors within this Commonwealth for use as fuel in propeller-driven piston engine aircraft or aircraft engines remains at the 2014 rate of 5.9¢1 per gallon or fractional part thereof.
B. Jet Fuel Rate for 2015
Under 74 Pa.C.S. § 6131(b) (relating to tax on jet fuels), the Secretary announces that for calendar year 2015 the rate of tax on jet fuels used or sold and delivered by distributors within this Commonwealth for use as fuel in turbine-propeller jet, turbojet and jet-driven aircraft and aircraft engines remains at the rate of 2.0¢ per gallon or fractional part thereof.
C. Calculating the 2015 Aviation Gasoline and Jet Fuel Rates
The rate of tax on aviation gasoline is adjusted annually beginning on January 1, 1985, and each January 1 thereafter.
The rate of tax on jet fuels is adjusted annually beginning on January 1, 1986 and each January 1 thereafter. Under 74 Pa.C.S. §§ 6121(b) and 6131(b) the rate of each tax increases or decreases 0.1¢ per gallon for each 10% increase or decrease in the producer price index for jet fuel as determined by the U.S. Department of Labor, Bureau of Labor Statistics, for the most recent 12-month period available as of November 1, subject to a maximum rate of 6.0¢ per gallon for aviation gasoline and 2.0¢ per gallon for jet fuels.
On October 22, 2014, the most recently available 12-month period was September 2013 to September 2014, as reported in the Bureau of Labor Statistics, U.S. Department of Labor, Producer Price Index, September 2014, USDL-14-1940, released October 15, 2014, for which the percentage change was -2.2%. Accordingly, the 2015 aviation gasoline tax rate remains the same as the 2014 tax rate of 5.9¢ per gallon; the 2015 jet fuel tax rate will remain the same as the 2014 rate of 2.0¢ per gallon.
II. Oil Company Franchise Tax
A. Transportation Funding Act of 2013
On November 25, 2013, Governor Corbett signed into law Act 89 of 2013 which amends Title 75 to both eliminate the inflationary cap on the Oil Company Franchise Tax and the fixed 12¢ per gallon Liquid Fuels and Fuels tax. Specifically, 75 Pa.C.S. § 9002 provides for the future removal of the cap and specific wholesale prices for use in the interim years. Accordingly, the statutorily fixed average wholesale price for 2015 is $2.49.
B. Calculating the 2015 Oil Company Franchise Tax Rate
The rate of the oil company franchise tax imposed under 75 Pa.C.S. Chapter 95 (relating to taxes for highway maintenance and construction), 75 Pa.C.S. § 9502 (relating to imposition of tax), and collected under 75 Pa.C.S. Chapter 90 (relating to liquid fuels and fuels tax), 75 Pa.C.S. § 9004(b), is determined annually by the Department of Revenue (Department) and announced by each December 15 for the following calendar year. The tax rate is determined on a ''cents per gallon equivalent basis,'' which is defined by 75 Pa.C.S. § 9002 as:The average wholesale price per gallon multiplied by the decimal equivalent of any tax imposed by section 9502 (relating to imposition of tax), the product of which is rounded to the next highest tenth of a cent per gallon. The rate of tax shall be determined by the Department of Revenue on an annual basis beginning on every January 1 and shall be published as a notice in the Pennsylvania Bulletin no later than the preceding December 15. In the event of a change in the rate of tax imposed by section 9502, the Department shall redetermine the rate of tax as of the effective date of such change and give notice as soon as possible.
''Average wholesale price'' as used above is defined as:The average wholesale price of all taxable liquid fuels and fuels, excluding the federal excise tax and all liquid fuels taxes shall be as follows:(1) After December 31, 2013, and before January 1, 2015, the average wholesale price shall be $1.87 per gallon.(2) After December 31, 2014, and before January 1, 2017, the average wholesale price shall be $2.49 per gallon.(3) After December 31, 2016, the average wholesale price shall be as determined by the Department of Revenue for the 12-month period ending on the September 30 immediately prior to January 1 of the year for which the rate is to be set. In no case shall the average wholesale price be less than $2.99 per gallon.
As noted above, the average wholesale price of liquid fuels and fuels to be used in calculating the 2015 Oil Company Franchise tax rate shall be $2.49.
The oil company franchise tax imposed under 75 Pa.C.S. § 9502 in terms of mills applicable to each gallon is:
Imposition Section Liquid
Fuels 75 Pa.C.S. § 9502(a)(1) 60.0 60.0 75 Pa.C.S. § 9502(a)(2) 55.0 55.0 75 Pa.C.S. § 9502(a)(3) 38.5 38.5 75 Pa.C.S. § 9502(a)(4) 00.0 55.0 75 Pa.C.S. § 9502(a)(5) 49.0 49.0 ___________________________ Total Mills per Gallon: 202.5 257.5 Decimal Equivalent: .2025 .2575 Multiply by Average Wholesale Price: x $2.49 x $2.49 _____ _____ Product: 50.42¢ 64.12¢ Oil Company Franchise
Tax per Gallon
(Rounded up to next
C. Imposition of Oil Company Franchise Tax on Liquid Fuels and Fuels
The act of April 17, 1997 (P. L. 6, No. 3) provides that the oil company franchise tax as computed above is imposed when liquid fuels or fuels are used or sold and delivered in this Commonwealth. Accordingly, the tax imposed upon the use or sale and delivery of one gallon of liquid fuels (primarily gasoline) shall be 50.5¢, and the tax imposed upon the use or sale and delivery of one gallon of fuels (primarily undyed diesel fuel) shall be 64.2¢.
III. Alternative Fuels Tax Rates for 2015
Under 75 Pa.C.S. § 9004(d) the Secretary is required to compute the rate of tax applicable to each alternative fuel on a gallon-equivalent-basis. Under 75 Pa.C.S. § 9002 ''gallon-equivalent-basis'' is defined as the ''amount of any alternative fuel as determined by the Department to contain 114,500 BTU's.'' The amount determined on a ''gallon-equivalent-basis'' for each alternative fuel is subject to the oil company franchise tax currently imposed on one gallon of gasoline. The rate of tax on one gallon of gasoline during the period of this notice is 50.5¢ which is equal to the Oil Company Franchise Tax.
The 2015 tax rates for Compressed Natural Gas (CNG) and Hydrogen are calculated by utilizing the unit of measurement referred to as the gasoline gallon equivalent (GGE). A GGE is the amount of alternative fuel it takes to equal the energy content of one liquid gallon of gasoline. A GGE is the most common form of measurement for gaseous fuels at the retail level. By measuring in GGEs one may make energy and cost comparisons with gasoline.
The Department recognizes the prevailing practice in private industry to adopt the ''diesel gallon equivalent'' or ''DGE'' for measuring Liquefied Natural Gas (LNG). Like the GGE, a DGE is a unit of measurement which is intended to compare the amount of energy content contained in a certain quantity of LNG to another form of energy, which for LNG, is most appropriately compared to diesel fuel. Industry standard conversions convey that 1.7 gallons of LNG would equal 1 DGE of LNG. Furthermore, because the industry practice utilizes the DGE when conveying the amount of LNG which has been dispensed to the consumer, it would be impractical for the Department to issue the tax rate on this alternative fuel in a different manner. Therefore, in accordance with industry standard practice, and consistent with the U.S. Department of Energy's conversion formula for LNG under the DGE standard, the 2015 tax rate for LNG shall be calculated using the DGE.
The Secretary announces that the 2015 tax rates for alternative fuels are as follows:
Rate of Conversion
Tax Rate per Gallon
of Alternative Fuel
Ethanol 76,330 $.338 Methanol 57,250 $.253 Propane/LPG 84,250 $.372 E-85 82,056 $.363 M-85 65,838 $.292 _______________________________________________
Electricity 3,414 BTU/kWh $.0152/kWh _______________________________________________ Alternative
to One Gallon
1 $.505 Hydrogen 1 $.505 _______________________________________________ Liquefied
Natural Gas (LNG)
to One Gallon
LNG 1 $.642
[Pa.B. Doc. No. 14-2591. Filed for public inspection December 12, 2014, 9:00 a.m.]
1 The rate of 5.9¢ per gallon consists of 1.5¢ per gallon tax imposed by the Liquid Fuels and Fuels Tax Act, 75 Pa.C.S. § 9004(c)(1), and the 4.4¢ per gallon additional tax imposed by 74 Pa.C.S. § 6121(a), (b). As limited by 74 Pa.C.S. § 6121(b), the combined rate of these two component taxes may never exceed 6¢ per gallon or be less than 3¢ per gallon.
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