Alternative Fuels and IFTA Alternative Fuels Committee History

Alternative Fuels and IFTA Alternative Fuels Committee

History l l 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) l October 2006 - IFTA, Inc. Board of Trustees approved the formation of a special committee to: l l l 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: l Fred Alleman - Audit Committee, Pennsylvania Department of Revenue l Don Boswell – Law Enforcement Committee, Virginia Department of Motor Vehicles l Donna Burch – Industry Advisory Committee, Ryder Transportation Services l Meg Cronk – Agreement Procedures Committee, New York Department of Taxation & Finance l Andrew Foster – Agreement Procedures Committee, New Brunswick Department of Finance l Gary Frohlick – ex-officio Board Member, Saskatchewan Finance l Garry Hinkley – Clearinghouse Committee, Maine Bureau of Motor Vehicles l Mark Osbaldeston – Attorneys Section Committee, Ontario Ministry of Revenue l Robert Pitcher – Industry Advisory Committee, American Trucking Association l Patricia Platt – Program Compliance Review Committee, Kansas Department of Revenue l Jan Skouby – Dispute Resolution Committee, Missouri Motor Carrier Services l 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 l Lonette Turner l Jessica Eubanks

AFC - Actions Steps l l l 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 results

Survey Results – Part A (Biodiesel) l l l 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) l 11 jurisdictions have incentives for biodiesel which included: l l l l 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) l Majority (70%) respondents want detailed information on incentives offered by other jurisdictions to: l l l advise carriers/trucking industry get details of legislation & procedures support tax policy help legislators develop legislation

Survey Results – Part B ( General) l Should IFTA set out the fuel types to be covered by the Agreement: l 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 – l 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) l Should a membership vote (amendment to the Agreement) be required to add a fuel type to the tax rate matrix l 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 l 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) l 76% said alternative fuels exemptions should be handled in accordance with R 830 as stated in the membership resolution passed in 2005 – – R 830 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 R 830 works for exemptions but not for a different tax rate for a fuel type

Survey Results – Part B (General) l How should blended/interchangeable fuels (biodiesel/diesel, gas/ethanol) be reported for IFTA? l l l l l Reported as diesel or gas and contact jurisdictions re: R 830/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 l l 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: – – l 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 R 830 as stated in the membership resolution

Next Steps – Membership Feedback l l Develop Alternative Fuels Database on the IFTA, Inc. website? Draft a ballot that incorporates the intent of membership resolution into the Agreement?