Rates of Tax on Aviation Gasoline and Jet Fuel for 2016; Oil Company Franchise Tax Rate for 2016; Alternative Fuels Tax Rates for 2016
[45 Pa.B. 7070]
[Saturday, December 12, 2015]
I. Aviation Gasoline and Jet Fuels
A. Aviation Gasoline Rate for 2016
Under 74 Pa.C.S. § 6121(b) (relating to tax on aviation fuels), the Secretary of Revenue (Secretary) announces that for calendar year 2016 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 decreases to the new rate of 5.5¢1 per gallon or fractional part thereof.
B. Jet Fuel Rate for 2016
Under 74 Pa.C.S. § 6131(b) (relating to tax on jet fuels), the Secretary announces that for calendar year 2016 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 decreases to the new rate of 1.6¢ per gallon or fractional part thereof.
C. Calculating the 2016 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, 2015, subject to a maximum rate of 6.0¢ per gallon for aviation gasoline and 2.0¢ per gallon for jet fuels.
On October 22, 2015, the most recently available 12-month period was September 2014 to September 2015, as reported in the Bureau of Labor Statistics, United States Department of Labor, Producer Price Index, September 2015, USDL-15-2005, released October 14, 2015, for which the percentage change was -45.8%. Accordingly, the aviation gasoline tax rate decreases from the 2015 rate of 5.9¢ per gallon to the new 2016 rate of 5.5¢ per gallon; the jet fuel tax rate also decreases, from the 2015 rate of 2.0¢ per gallon to the new 2016 rate of 1.6¢ 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 75 Pa.C.S. (relating to Vehicle Code) 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 (relating to definitions) 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 2016 is $2.49.
B. Calculating the 2016 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) (relating to imposition of tax, exemptions and deductions), 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 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 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 previously noted, the average wholesale price of liquid fuels and fuels to be used in calculating the 2016 Oil Company Franchise Tax rate shall be $2.49.
The Oil Company Franchise Tax imposed under 75 Pa.C.S. § 9502 is separated into two portions: mills per gallon not subject to discount (NSTD) and mills per gallon subject to discount (STD). The following table details the underlying calculations:
Composition of Oil Company Franchise Tax (OCFT)
OCFT Per Gallon Not Subject to Discount (NSTD)
Imposed By: 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 ___________________________ NSTD Mills per Gallon: 153.5 208.5 Decimal Equivalent: .1535 .2085 Average Wholesale Price: x $2.49 x $2.49 _____ _____ Product: 38.22¢ 51.92¢ OCFT per Gallon, NSTD, rounded to next highest
tenth per 75 Pa.C.S. § 9002:
OCFT Per Gallon Subject to Discount (STD)
Imposed By: Liquid Fuels Fuels 75 Pa.C.S. § 9502(a)(5) 48.0 48.0 ___________________________ STD Mills per Gallon: 48.0 48.0 Decimal Equivalent: .0480 .0480 Average Wholesale Price: x $2.49 x $2.49 _____ _____ Product: 11.95¢ 11.95¢ OCFT per Gallon, STD,
rounded to next highest
tenth per 75 Pa.C.S. § 9002:
Total OCFT per Gallon, rounded to next highest tenth
Liquid Fuels Fuels Total OCFT = NSTD + STD: 50.3¢ 64.0¢
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 previously computed 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 1 gallon of liquid fuels (primarily gasoline) shall be 50.3¢, and the tax imposed upon the use or sale and delivery of 1 gallon of fuels (primarily undyed diesel fuel) shall be 64.0¢.
III. Alternative Fuels Tax Rates for 2016
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 1 gallon of gasoline. The rate of tax on 1 gallon of gasoline during the period of this notice is 50.3¢ which is equal to the Oil Company Franchise Tax.
The 2016 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 1 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 Secretary announces that the 2016 tax rates for alternative fuels are as follows:
Rate of Conversion
Tax Rate per Gallon
of Alternative Fuel
Ethanol 76,330 $.336 Methanol 57,250 $.252 Propane/LPG 84,250 $.371 E-85 82,056 $.361 M-85 65,838 $.290 Liquefied Natural Gas (LNG) 75,714 $.334 _______________________________________________
Electricity 3,414 BTU/kWh $.0151/kWh _______________________________________________ Alternative Fuels under GGE
GGE Equivalent to One Gallon
Tax Rate per GGE _______________________________________________
Compressed Natural Gas (CNG) 1 $.503 Hydrogen 1 $.503 _______________________________________________
EILEEN H. McNULTY,
[Pa.B. Doc. No. 15-2189. Filed for public inspection December 11, 2015, 9:00 a.m.]
1 The rate of 5.5¢ per gallon consists of the 1.5¢ per gallon tax imposed by the Liquid Fuels and Fuels Tax Act, 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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