Fuel type BTU content Formula Tax rate

per gallon (BTU

value fuel/

BTU value

gasoline)

x tax rate

gasoline

115,000 100% x 22¢ 22¢ per

gallon as

authorized

in section

2903

Methanol 65,530 57% x 22¢ 12.5¢ per

gallon

Ethanol 81,850 71% x 22¢ 15.6¢ per

gallon

84,500 73% x 22¢ 16¢ per

gallon

100,000 87% x 22¢ 19.1¢ per

Natural Gas (BTU per 100 100

standard cubic standard

feet) cubic

feet

Sec. 6. 36 MRSA §3203-B, as enacted by PL 1999, c. 473, Pt. B, §4, is repealed.

Sec. 7. 36 MRSA §3203-C is enacted to read:

§3203-C.__Inventory tax

On the date that any increase in the rate of tax imposed under this chapter takes effect, an inventory tax is imposed upon all distillates that are held in inventory by a distributor or retail dealer as of the end of the day prior to that date on which the tax imposed by section 3203, subsection 1 has been paid.__The inventory tax is computed by multiplying the number of gallons of tax-paid fuel held in inventory by the difference between the tax rate already paid and the new tax rate.__Distributors and retail dealers that hold such tax-paid inventory shall make payment of the inventory tax on or before the 15th day of the next calendar month, accompanied by a form prescribed and furnished by the State Tax Assessor.__In the event of a decrease in the tax rate, the distributor or retail dealer is entitled to a refund or credit, which must be claimed on a form designed and furnished by the assessor.

Sec. 8. 36 MRSA c. 465 is enacted to read:

CHAPTER 465

INDEXING OF MOTOR FUEL TAX RATES

§3321.__Annual adjustment of tax rates

1.__Generally.__Beginning in 2003, and each calendar year thereafter, the excise tax imposed upon internal combustion engine fuel pursuant to section 2903, subsection 1 and the excise tax imposed upon distillates pursuant to section 3203, subsection 1 are subject to an annual rate of adjustment pursuant to this section.__On or about February 15th of each year, the State Tax Assessor shall calculate the adjusted rates by multiplying the rates in effect on the calculation date by an inflation index as computed in subsection 2.__The adjusted rates must then be rounded to the nearest 1/10 of a cent and become effective on the first day of July immediately following the calculation.__The assessor shall publish the annually adjusted fuel tax rates and shall provide all necessary forms and reports to suppliers, distributors and retail dealers.

2.__Method of calculation; inflation index defined.__The inflation index for any year is the Consumer Price Index as defined in section 5402, subsection 1 for the calendar year ending on the December 31st immediately preceding the calculation date, divided by the Consumer Price Index for the prior calendar year.

3.__Exclusion.__This section does not apply to internal combustion engine fuel purchased or used for the purpose of propelling jet or turbojet engine aircraft.

SUMMARY

This bill promotes the fiscal sustainability of the Highway Fund by annually indexing motor fuel taxes to reflect inflation, with the new rates taking effect each July 1st, starting in 2003.