Rep. Todd Young’s (R-IN) tax-parity language passed the House Wednesday as part of larger legislation that reauthorizes support for federal highway and transportation programs.
Young’s provision, which has bipartisan backing, will ensure that excise taxes on propane and liquefied natural gas (LNG) that are used for highways are levied at a rate commensurate with the amount of energy they expend relative to diesel and gasoline, respectively.
“Dozens of homegrown companies in my Indiana district have developed and adopted alternative fuel technologies,” Young said. “This provision prevents Washington from picking winners and losers and provides this burgeoning sector of our economy equitable treatment within the federal tax code.”
Data indicates that highway-use LNG produces 58 percent of the energy output of diesel, but is taxed at the same 24.3 cents per gallon rate. Likewise, propane produces 72
percent of the energy output of gasoline, but is taxed at the same rate of 18.3 cents per gallon. The Alternative Fuel Tax Parity provision introduced by Young acknowledges these numbers and resets the energy equivalent rates for LNG (14.1 cents per gallon) and propane (13.2 cents per gallon).
“Its important we level the playing field to encourage investments in these up-and-coming industries,” Young said. “Especially those finding ways to utilize Americas abundant domestic energy reserves. This provision will spur private-sector innovation that is not just good for economic growth, but is lessening our dependence on foreign energy thereby enhancing our nation’s overall security.”
The provision is supported by a number of influential officials within the LNG industry, including: Kathryn Clay, vice president of policy strategy for American Gas Association; Frank Macchiarola, executive vice president of government affairs for America’s Natural Gas Alliance; Laura Lane, president of UPS Global public affairs; and Matthew Godlewski, president of NGVAmerica.