A bi-partisan group of congressmen seeking a fair excise tax on liquefied natural gas and propane introduced the Alternative Fuel Tax Parity Actwas on Thursday. Reps. Todd Young (R-IN), John Larson (D-CT), Mac Thornberry (R-TX), and Ron Kind (D-WI) jointly authored the bill.
The legislation would ensure that excise taxes on LNG and propane for highway use would be levied at a rate consistent with energy output relative to diesel and gasoline. Because natural gas and propane have lower energy output per gallon than diesel and gasoline, many have called a per gallon tax, unfair to the alternative fuel industry.
“As we see more and more alternative fuel service stations popping up around my district and the country, it’s important that we ensure inequitable tax rates don’t discourage consumers from adopting alternative fuel vehicles,” said Young. “This bill is an easy way to ensure a level playing field for this burgeoning sector of our economy.”
LNG produces 58% of the energy output per gallon as diesel fuel but is taxed at the same 24.3 cents per gallon rate. Propane has 72% of the energy output of gasoline but again is charged at the same 18.3 cents per gallon rate.
By those numbers, LNG is taxed at a rate 70% higher than diesel fuel on an energy content basis which makes the fuel type prohibitively expensive to adopt for businesses, according to the alternative fuels advocacy group NGVAmerica. The group sees this legislation as a signal that Congress is interested in removing obstacles standing in the way of further natural gas adoption.
“The introduction of this bill demonstrates continued support in the Congress for natural gas as a transportation fuel,” said Matthew Godlewski president of NGVAmerica. “Reps. Young, Larson, Thornberry and Kind recognize the important role that clean-burning, domestic natural gas can play in improving our air and supporting American jobs at home.”