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NOTICES

DEPARTMENT
OF REVENUE

Rates of Tax on Aviation Gasoline and Jet Fuel for 2011; Oil Company Franchise Tax Rate for 2011; Alternative Fuels Tax Rates for 2011

[40 Pa.B. 7162]
[Saturday, December 11, 2010]

Aviation Gasoline and Jet Fuels

Aviation Gasoline Rate for 2011

 Under 74 Pa.C.S. § 6121(b) (relating to tax on aviation fuels), the Secretary of Revenue (Secretary) announces that for calendar year 2011 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 increases to the new rate of 5.5¢1 per gallon or fractional part thereof.

Jet Fuel Rate for 2011

 Under 74 Pa.C.S. § 6131(b) (relating to tax on jet fuels), the Secretary announces that for calendar year 2011 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 increases to the new rate of 1.7¢ per gallon or fractional part thereof.

Calculating the 2011 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 United States 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 November 1, 2010, the most recently available 12-month period was September 2009 to September 2010, as reported in Bureau of Labor Statistics, United States Department of Labor, Producer Price Indexes, September 2010, USDL 10-1425, released October 14, 2010, for which the percentage change was +17.1%. Accordingly, the aviation gasoline tax rate increases from the 2010 rate of 5.4¢ per gallon to the new 2011 rate of 5.5¢ per gallon; the jet fuel tax rate also increases, from the 2010 rate of 1.6¢ per gallon to the new 2011 rate of 1.7¢ per gallon.

Oil Company Franchise Tax

Oil Company Franchise Tax Rate for 2011

 The Secretary announces that for the calendar year 2011, the rate of the oil company franchise tax remains at the current rate of 19.2¢ per gallon on all liquid fuels and 26.1¢ per gallon on all fuels used or sold and delivered by distributors within this Commonwealth under 75 Pa.C.S. § 9004(b) (relating to imposition of tax, exemptions and deductions).

Calculating the 2011 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 act), 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 (relating to definitions) 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 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 previously used is defined as:

The average wholesale price per gallon of all taxable liquid fuels and fuels, excluding the federal excise tax and all liquid fuels taxes, 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 90¢ nor more than $1.25 per gallon.

 For the 12-month period ending September 30, 2010, the Department has determined that the average wholesale price of liquid fuels and fuels was $2.147 per gallon, which exceeds the statutory maximum of $1.25; therefore, an average wholesale price of $1.25 is used to compute the tax rate for 2011.

 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 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
Total Mills per Gallon: 153.5 208.5
Decimal Equivalent: .1535 .2085
Multiply by Average
 Wholesale Price:
× $1.25
× $1.25  
Product: 19.188¢  26.063¢
Oil Company Franchise
 Tax per Gallon
(Rounded Up to
Next Highest Tenth):
19.2¢    26.1¢  

Collection of Oil Company Franchise Tax

 The act of April 17, 1997 (P. L. 6, No. 3) provides that the oil company franchise tax as previously computed is collected at the same time as the liquid fuels and fuels tax of 12¢ per gallon; therefore, effective January 1, 2011, the combined rate of tax for liquid fuels (primarily gasoline) is 31.2¢ per gallon and for fuels (primarily undyed diesel fuel) is 38.1¢ per gallon.

Alternative Fuels Tax Rates For 2011

 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 BTUs.'' The amount determined on a ''gallon-equivalent-basis'' for each alternative fuel is subject to the liquid fuels and oil company franchise taxes currently imposed on 1 gallon of gasoline. The rate of tax on 1 gallon of gasoline during the period of this notice is 12.0¢ for the liquid fuels tax and 19.2¢ for the oil company franchise tax for a total tax of 31.2¢ per gallon of gasoline.

 The Secretary announces that the 2011 tax rates for alternative fuels are as follows:

Alternative
Fuel
Rate of Conversion (BTU/gal of alternative fuel) Amount Equivalent to One Gallon of Gasoline at 114,500 BTU per gallon Tax Rate per Gallon of Alernative Fuel
Ethanol 76,400 1.499 $.208
Methanol 56,560 2.024 $.154
Propane/LPG 83,500 1.371 $.228
E-85 80,460 1.423 $.219
M-85 65,350 1.752 $.178
Compressed Natural Gas  (CNG) 29,000 @
3,000 PSI
3.948 $.079
Liquefied Natural Gas  (LNG) 66,640 1.718 $.182
Electricity 3,412 Btu/ KWH 33.558 KWH $.0093/KWH

C. DANIEL HASSELL, 
Secretary

[Pa.B. Doc. No. 10-2377. Filed for public inspection December 10, 2010, 9:00 a.m.]

_______

1  The rate of 5.5¢ per gallon consists of the 1.5¢ per gallon tax imposed by 75 Pa.C.S. § 9004(c)(1) and the 4.0¢ per gallon additional tax imposed by 74 Pa.C.S. § 6121(a). 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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