After learning that his alternative fuel tax parity provision was signed into law this week, U.S. Rep. Todd Young (R-IN) discussed the importance of the legislation and its results last week.
“With this provision signed into law, dozens of homegrown companies in my Indiana district will receive equitable treatment within the federal tax code,” Young explained. “The tax code shouldn’t be a tool for Washington to pick winners and losers, and my law guarantees this up-and-coming sector of our economy a level playing field on which to compete.”
Essentially, Young’s bipartisan measure will ensure that all excise taxes on liquefied natural gas (LNG) and propane that are for highway use are levied at a rate consistent with their energy output relative to diesel and gasoline, respectively, as opposed to a per gallon rate. Congress included this tax parity provision as part of an underlying bill that extends federal highway and transit funding through October 29. The legislation was passed last week and signed into law by President Obama on Thursday.
LNG for highway use results in only 58 percent of the energy output of diesel, but has been taxed at the same 24.3 cents per gallon rate up until now. Similarly, propane produces 72 percent of the energy output of gasoline, but is taxed at the same 18.3 cents per gallon rate. Recognizing the disparities in these numbers, the Alternative Fuel Tax Parity provision will reset the energy equivalent rates for LNG at 14.1 cents per gallon and propane at 13.2 cents per gallon.