Alternative Fuels and IFTA

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					Alternative Fuels and IFTA

            Alternative Fuels

   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)

  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

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

     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

   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

   Several jurisdictions have incentives for biodiesel
    which include:
           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
              – 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
              –   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
    –   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
           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
   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
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?

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