U.S. Sens. Michael Bennet, D-Colo., and Richard Burr, R-N.C., have introduced the LNG Excise Tax Equalization Act of 2013 (S.1103), which seeks to establish the equitable taxation of liquefied natural gas (LNG) as a transportation fuel by basing the federal highway excise tax rate on LNG's energy output.
Companion legislation was introduced in the House by U.S. Reps. Mac Thornberry, R-Texas, and John Larson, D-Conn., on May 24.
Both bills are based on the premise that LNG should not be taxed at the same rate as diesel, but it currently is (24.3 cents per gallon). The energy output of one gallon of diesel is equivalent to about 1.7 gallons of LNG, which means a gallon-based tax puts LNG at a 70% higher rate.
Taxing LNG according to the diesel gallon equivalent (DGE) by energy output rather than by volume will eliminate the disparity.
‘We commend Senators Bennet and Burr for this common-sense measure,’ says Richard Kolodziej, president of NGVAmerica. ‘Removing this tax penalty will accelerate the use of LNG in our nation's trucking fleet and help reduce America's reliance on foreign oil.’
