Alternative Fuels and IFTA

Alternative Fuels Committee

History

Emergence of alternative fuels In 2005 membership resolution ratified Several jurisdictions introduced exemptions

and reduced tax rates on blends of biodiesel Many questions & concerns raised by

member jurisdictions and industry

Alternative Fuels Committee (AFC)

October 2006 - IFTA, Inc. Board of Trustees approved the formation of a special committee to:

survey jurisdictions summarize current incentives/exemptions analyze impacts of alternative fuels provide recommendations

January 2007- AFC formed with representation from each IFTA committee

Alternative Fuels Committee (AFC)

COMMITTEE MEMBERS: Fred Alleman - Audit Committee, Pennsylvania Department of Revenue Don Boswell – Law Enforcement Committee, Virginia Department of Motor Vehicles Donna Burch – Industry Advisory Committee, Ryder Transportation Services Meg Cronk – Agreement Procedures Committee, New York Department of Taxation & Finance Andrew Foster – Agreement Procedures Committee, New Brunswick Department of Finance Gary Frohlick – ex-officio Board Member, Saskatchewan Finance Garry Hinkley – Clearinghouse Committee, Maine Bureau of Motor Vehicles Mark Osbaldeston – Attorneys Section Committee, Ontario Ministry of Revenue Robert Pitcher – Industry Advisory Committee, American Trucking Association Patricia Platt – Program Compliance Review Committee, Kansas Department of Revenue Jan Skouby – Dispute Resolution Committee, Missouri Motor Carrier Services Bill Staples – Dispute Resolution Committee, New Brunswick Department of Finance

COMMITTEE CHAIR:Kim Craig – IFTA, Inc. Board of Trustees, Ontario Ministry of Revenue

IFTA, Inc. ADVISORS Lonette Turner Jessica Eubanks

AFC - Actions Steps

March 1 held first conference call - subcommittee formed to draft survey

March & April - questions developed and survey drafted April - final survey approved by committee May 3 – survey set up on IFTA, Inc. website and email

sent to all commissioners June 26 – AFC conference call to discuss survey results

Survey Survey results

Survey Results – Part A (Biodiesel)

50 jurisdictions responded (86%) 9 jurisdictions indicated that biodiesel in their

jurisdiction is handled by a reduced tax rate or full exemption

6 jurisdictions indicated that within one-two years their jurisdiction will be considering providing an incentive

Survey Results – Part A (Biodiesel)

11 jurisdictions have incentives for biodiesel which included:

Producer credit Supplier/retailer refund Distributor deductions Income tax credit on production Sales tax incentive Reported as diesel for IFTA and separate refund process Tax reduction

Sunset programs in some jurisdictions

Survey Results - Part A (Biodiesel)

Majority (70%) respondents want detailed information on incentives offered by other jurisdictions to:

advise carriers/trucking industry get details of legislation & procedures support tax policy help legislators develop legislation

Survey Results – Part B ( General)

Should IFTA set out the fuel types to be covered by the Agreement:

54% said no– Jurisdiction law determines what and how motor fuel is

taxed/exempted– Jurisdictions rights/laws may then contradict IFTA– A new fuel type may be missed and considered exempt– ‘Motor Fuels’ is already defined in IFTA to be all fuels placed in

the supply tank 44% said yes

– Co-mingled fuel needs to be reported one way– Uniformity– Consistency– Growth of fuel types resulting from blending

Survey Results – Part B (General)

Should a membership vote (amendment to the Agreement) be required to add a fuel type to the tax rate matrix

56% said yes– Help in administration of IFTA– Jurisdictions should have a say and be given time to implement and

provide instructions– Blends should not be allowed on matrix– Need to control types on matrix jurisdictions are required to administer

38% said no– IFTA should not control/limit fuel types– ‘Motor Fuels’ is already defined in IFTA to be all fuels placed in the supply

tank– Jurisdictions should have flexibility to experiment with alternative fuels

Survey Results – Part B (General)

76% said alternative fuels exemptions should be handled in accordance with R830 as stated in the membership resolution passed in 2005

– R830 eases the IFTA administration if licensees submit claims for refunds to the respective jurisdiction, but creates a burden on jurisdictions and consumers

– IFTA should not be concerned with alternative fuel on IFTA returns

– Cannot force legislatures to abide by resolution– R830 works for exemptions but not for a different tax rate

for a fuel type

Survey Results – Part B (General)

How should blended/interchangeable fuels (biodiesel/diesel, gas/ethanol) be reported for IFTA?

Reported as diesel or gas and contact jurisdictions re: R830/refund In accordance with membership resolution Reported as the main/predominant fuel type purchased or higher tax

rate Reported on return Jurisdiction indicate how it is taxed Diesel engine=diesel fuel/ gasoline engines= gasoline Separate line item on the IFTA return Excluded from IFTA – can’t effectively report interchangeable fuels Blends with diesel reported/taxed as diesel; blends with gas

reported/taxed as gas

Conclusions from survey results

Incentives exist in several jurisdictions and more to come Several jurisdictions offer incentives without effecting IFTA

administration Majority(70%) of jurisdictions want detailed information on

incentives offered by other jurisdictions Split on whether fuel types:

– should be covered by the Agreement– being added to the tax rate matrix require a membership vote

Majority (76%) of jurisdictions want alternative fuels to be handled in accordance with R830 as stated in the membership resolution

Next Steps – Membership Feedback

Develop Alternative Fuels Database on the IFTA, Inc. website?

Draft a ballot that incorporates the intent of membership resolution into the Agreement?