Taxes on alternative fuels?

[DanG]

I hate to risk starting another political tirade here, but this may be important to some of you...or all of us. :-\  I just heard on TV that a guy in North Carolina was fined $1000 by the State for using veggie oil in his diesel car.  The fine was because he wasn't paying road taxes.  My question is, what vehicle has the State of North Carolina provided for him to pay these taxes?  Is it not incumbent on them to provide a system for citizens to pay a tax that they expect to collect?

The brief news blurb I saw said that the State had all kinds of programs to encourage the use of alternative fuels. ??? :

[Dan_Shade]

I agree.

Do tractors pay road tax?  what about horse and buggies?  what about BICYCLES?!?!?! 

[Fla._Deadheader]

  Here ya go. Enjoy the ride.

  click here

[Tom]

Is it really a "fuel" tax or is it a Gasoline tax and a diesel oil tax.   They  may call it a road  tax, but only because the proceeds are supposed to go toward road upkeep.  The ony alcohol tax I know of is for human ingestion.  When did they start taxing "anything" that you put in you gasoline tank?   I've looked for the actual verbiage and can't find it.

[Fla._Deadheader]

You're not alone looking for the actual documentation. That's typical Govt. employees changing the wording to fit their needs  : >:( >:(

  They don't understand what's going on, so, it MUST need taxing  >:( >:(

[DanG]

Problem is that they DO understand what's going on, Harold.  They see that they will lose a lot of tax money if too many people go the bio-fuel route on their own.  I can't say that I totally disagree with them.  It is only fair that all users of the roadways help to pay for them.  I think there should be a bicycle tax to pay for all the extra pavement that is laid down for bike lanes.  The fuel tax is the fairest way I can think of to pay for the roads.  My problem with the story is that they fined the guy for not paying the tax without providing a way for him to pay it.  How is he supposed to determine how much to pay, or to whom he should pay it?

We have gone way beyond the point where we only concern ourselves with our own individual wallets.  We need to think about what we are going to do to maintain our current way of living.  As citizens become more innovative in alternative ways to power their vehicles, Government needs to become more innovative in securing the funding to maintain the roads.  Singling out one guy to make an example of is not the way!

[Fla._Deadheader]

  DanG, if you read that whole thread, no-one is against paying the taxes. It's the double dealing, paperwork that is the problem, as in all Govt. situations.

  There will always be tax cheats. The folks doing the fuel thing are actually pioneering the making of quantities of fuel by individuals.

  Instead of Govt. having a simple form to pay the tax by, they use paperwork required by commercial operators.

  The guy in Illinois, reported about here earlier, has to become a commercial operator of receiving and distributing fuel, before he can pay the tax. He has all records of exactly how much he made and used. Tax due is less than $400.00. for 2 years. Problem is, Govt can't simply put a form together. He MIGHT be doing that they can't see, so, he MUST be doing something illegal. They want him to post a $2500.00 Bond ??????

  What gets me is, Tax WAS paid on the cooking oil. Tax WAS paid on the Methanol and Lye. Now, they want more tax, WITH the hassle  : :

  It's NEVER simple with the State Govt.  Federal Govt has the form, no problem ???

[DanG]

I think we pretty much just said the same thing, didn't we?

[Fla._Deadheader]

Can't be.

  We never agree ???  : : :  Do we  ;D

[Ron Wenrich]

Our state has a tax rates for all types of alternative fuels.  They've had them for over 10 years. 

Alternative Fuels Tax Rates
      
CNG (gal)  $.079/gallon   
Propane/LPG (gal)  $.228/gallon   
Ethanol (gal)  $.208/gallon   
Methanol (gal)  $.154/gallon   
E-85 (gal)  $.219/gallon   
M-85 (gal)  $.178/gallon   
LNG (gal)  $.182/gallon   
Electricity  $.0093 KWH

They also have forms for you to file the tax and you can prepay taxes.  If prepaid, you also get a discount.

In these cases, compliance seems to be voluntary until caught.   :D  Then they'll make an example out of someone so others fall in line.
   
         

[Ianab]

In NZ diesel fuel doesn't have road tax levied like petrol or LPG does. A lot of it is used off-road and by heavy trucks that have their own mileage/weight based tax system. If you run a diesel powered car / ute then you have to pay tax seperatly and buy an extra windscreen sticker with with your mileage printed on it. So Biodiesel just stays in that class and you buy your mileage as needed. Go to the post shop and buy another 5,000 ks when you need.

But yeah.. if the system isn't in place like that it makes life hard  :

Cheers

Ian

[DanG]

Can't be.

  We never agree ???  : : :  Do we  ;D

You have agreed with me a couple of times, but I don't recall an occasion where I agreed with you. ;D

[Cedarman]

If its is a road tax, then each person should pay according to the miles driven, not the gallons used.  If I get 12 mpg in my big car, I am paying a lot more taxes per mile than my daughters car that gets 40mpg.  So there is a big flaw in that we are paying for the road use.  We are paying for the gallons used.  They just use the tax that they get for the roads.  What about the guy that plugs his car in and uses electricity to charge his battery?  How is he paying for the roads?

It won't be long before they will be doing odometer checks and you will pay according to miles driven.  Then the used car dealers won't have to turn the miles back.

[scsmith42]

I'm on a bio-diesel list server in North Carolina, and the fellow that DanG referenced in his original posting is on the same list serve.

A couple of weeks ago he shared some insight into the situation, via posting a copy of a letter that he sent to the Governor of NC.

The letter is insightful, and I've posted it below.

Regards,  Scott

*****************************

"Robert Teixeira wrote:

Hello to all,

I thought that the folks on the list should be made aware of my situation with the Department of Revenue and using non-road taxed fuel.

Rather than write the story again I thought I'd send a copy of my letter to Governor Easley.

The Charlotte Observer will do a story on this issue in the next several weeks and I will forward a link to the list when it comes out.

Here's the letter, let the discussions begin,

Bob Teixeira


Dear Mr. Easley,

For six months I have been operating a vehicle on vegetable oil and I am currently in a bit of a legal situation with the Department of Revenue.

I was stopped as I drove by an RV checkpoint for the use of dyed diesel and I have been issued federal and state revenue penalties for driving on fuel that did not include road tax.  Total fines are $1000.00 State and $1000.00 Federal.  They suspected me because I proudly displayed a sticker stating that the vehicle ran on 100 percent vegetable oil.

The fines are steep because of the common abuse of off road dyed diesel being used in trucking companies and RV's. They view this as the same offense.

I have no quarrel with the collection of road tax but I feel the penalties are not related to my offense and that the continued collection of these fines is not in the best interest of the country and our move towards independence from foreign oil. Individuals who are trying to do the right thing environmentally cannot and should not continue to take this kind of financial hit.

This exact situation has occurred in Illinois in January 07.  The difference was that their Department of Revenue did not issue a penalty for the use of non-tax paid fuel. They simply were interested in the lost revenue which I should also pay and gladly will do so.  By my generous calculations I owe the Dept. of Revenue $ 86.00.

In addition the state of Illinois has recently made changes to the laws regarding this issue. In order to make it easier for individuals to comply with road tax issues, no license is required for usage of up to 5000 gallons per year and payments are to be made once yearly.

If we really want to encourage NC residents to take the lead on alternative fuel use we could follow the example from Washington State where individuals can use up to 600 gallons of bio-fuels per year tax exempt.

Currently NC law requires a license to be a fuel provider, a bond of $2000.00, and monthly payments. The bond portion is currently up for review, a step in the right direction.

I see great inequity in the current system. Toyota Priuses and other hybrid vehicles do not pay road tax for any miles driven on their electric motors and what about vehicles that run on natural gas?  I have written Governor Arnold Schwarzenegger wondering how he calculates his road usage tax on his hydrogen powered Hummer. The Department of Revenue is targeting vehicles that run on bio-fuels because it sort of fits with the existing laws.  It is clear that the laws for this kind of activity are behind what is happening on the street. We need to make some changes. We need equity and clarity. I suggest reporting odometer readings as part of our annual tax obligations.

Perhaps it is too late for me, since my offense falls under current laws, but it pains me to think that individuals will continue to be discouraged from using fuels from renewable sources that are better for the environment, I know I have been.

My penalty is due by June 13th and any advice before that date would be greatly appreciated!

Sincerely,

Bob Teixeira"

[DanG]

Thanks for posting that, Scott.  It is nice to know the facts in the case, rather than trying to draw conclusions from a distorted news blurb.  Keep us posted on any developments you learn of, would you?

It is fortunate that the victim here was someone who knew the proper way to handle it.  He is trying to work within the system to have the laws adjusted to fit the current situation.  That's the American way.  I hope the Governor will do something to provide relief.

[OneWithWood]

In the last legislature the State of Indiana exempted home made bio-diesel from fuel taxes as long as it is used by the maker and not sold.

Once in a great while something goes right. 

[Cedarman]

Well, pick me up off the floor and give me oxygen.

A Hoosier :D :D

[DanG]

Good for Indiana! 8)

I got curious and took a quick(2 hours) tour of the Fla laws on fuel taxation.  The only mention I found about alternative fuels was the licensing of bio-diesel makers.  You have to have a state license to make AND sell it.  I assume by that that you could make it for your own use without a license.  I never found anything about taxation of it specifically, but there was a lot about dyed(off-road) diesel fuel.  It is legal for farmers and commercial fishermen, but not for construction equipment or pleasure boats.  The taxes for marine use are much lower than for road use, something like 4.7¢ per gallon.  The tax on aviation fuel is about twice that, and for road use, about 10 times.  There are forms available for paying those taxes, but again, no mention of alternative fuels that I could find.  I guess we'll see what happens when some over-zealous DOT cop tickets somebody for burning frenchfry grease, eh?

[Don P]

There was a somewhat similar case here a few months ago. The victim came up on their radar when he approached local gov't about providing them with fleet veggie diesel. They let no good deed go unpunished  :

[Tom]

This is to be expected since I believe it to be the goal of Government to stop you from doing anything.

[scsmith42]

Dang, will do.

FYI there is a North Carolina State Congresscritter that drives a car fueled by veggie oil.  He is introducing a bill to create an exemption for personal use (I'm not sure what the annual gallons exempted will be).

Will keep you posted.

Scott

[DanG]

Thanks Scott.  I'll look forward to the updates.  This is good stuff.

By the way, I've been meaning to mention...I gotta take exception to your "two cents worth" line.  It should read, "He whose DADDY dies with the most toys, wins."
;D :D :D :D

[scsmith42]

DanG -  :D   :D   :D

Amen Bro!!!

Here's the latest update on NC Biofuels tax:

On Jun 15, 2007, at 12:54 AM, Robert Teixeira wrote:

> Hello to all,
>
> To update you, I  heard from Senator Bingham.   He is adamant about
> pushing through new legislature that will make individual users of
> less than 500 gallons per quarter, tax exempt! That's 2000 gallons per
> year folks and that would take care of just about all of us. They are
> in session right now and Senator Bingham is very aggressively trying
> to add this issue in to the current session.  We couldn't have a
> better advocate,  he's a real "shoot from the hip", "tell it like he
> sees it" man and it was a true pleasure to speak with him.  Yippee!  I
> think that my work is almost done and I'm ready to get back to music
> related stuff.  Remember, It's not a law yet, wait for follow up.
>
> One more thing to do and then I think I'm done.  I will interview with
> an NPR reporter tomorrow for a spot to air on NPR's "Market Place", 
> not sure what day or time.
>
> Thanks again for all the support!
>
> Bob Teixeira

[TW]

There has been some problems of this kind in Finland too. Our government has decided to do nothing about it because we will build nuclear powerplants to reach the goals of the Kyoto agreement, and therefore do not need renewable motor fuel.
Idiots. My English vocabulary does not include any dirty enogh word so I cannot describe my thoughts.

My sympaties are with those of you who tries to solve thge fuel problem. Go on!!!

[DanG]

I'm new to this taxation part of the alternative fuel issue, so I haven't had much time to reflect on it.  But, as I formulate my cogitation outline, I am starting to wonder if these tax exemptions are wise.  I think it is great that some of the pioneers in this new technology will recieve this extra incentive, but I'm not sure it is right to exempt all the users indefinitely.  Right now, it isn't much of an issue because there aren't many folks doing it, but what if it becomes more mainstream, and millions of cars and trucks start running on veggie oil and alcohol?  It just isn't right for these people to get a "free ride" while the people who don't have an option have to pay all their taxes for them.  My initial thought is that those who make their own bio-diesel, and those who merely recycle cooking oil should get a break.  Those who buy it from a commercial producer should pay taxes on it to do their part in maintaining the roads.  For the record, I have always thought that ALL of the fuel tax should go to either the roads or the regulation and enforcement of the fuel laws, and to pay the cost of taxing the fuel.  Not a nickel should go to anything else.  By the same token, no other tax money should go to those things.

Come to think of it, the guys that are pumping oil from the local Chinese restaurant are getting their fuel for free anyway, so they shouldn't mind paying the 40 or 50 cents in taxes. :  The guys like OWW, who have made a significant investment in money and effort should definitely get a break.

Now these are just my initial knee-jerk thoughts on the matter.  I'll probably update some of this after a bit of cogitation and some input from my friends here.