This docum ent does not reflect the intent or official position of the bill sponsor or House of Representatives.
STORAGE NAME: h0529.ECC
DATE: 3/3/2023
HOUSE OF REPRESENTATIVES STAFF ANALYSIS
BILL #: HB 529 Natural Gas Fuel Taxes
SPONSOR(S): Mooney and others
TIED BILLS: IDEN./SIM. BILLS: SB 322
REFERENCE ACTION ANALYST STAFF DIRECTOR or
BUDGET/POLICY CHIEF
1) Energy, Communications & Cybersecurity
Subcommittee
Walsh Keating
2) Ways & Means Committee
3) Commerce Committee
SUMMARY ANALYSIS
Prior to 2014, owners or operators of Florida-licensed motor vehicles powered by natural gas fuels were
required to pay an annual decal fee for each such vehicle. In 2013, the Legislature passed a bill to “help
reduce transportation costs in this state and encourage freight mobility investments that contribute to the
economic growth of the state.” To accomplish these goals, the bill created a 5-year rebate program for certain
costs involved in the conversion, purchase, or lease of natural gas fuel fleet vehicles, eliminated the annual
decal fees for natural gas vehicles, and created a new tax structure whereby natural gas fuels would be taxed
on a per unit basis beginning January 1, 2019. In 2018, the legislature delayed the start date of this new tax
structure by an additional 5 years to January 1, 2024. Accordingly, natural gas fuels have not been subject to
state fuel taxes since January 1, 2014.
The bill provides for a 2-year delay of the imposition of natural gas fuel taxes that would otherwise go into
effect January 1, 2024. The bill changes the effective date of the imposition of these taxes to January 1, 2026.
To conform to the delayed imposition of these taxes, the bill:
Extends by 2 years (from December 31, 2023, to December 31, 2025) the expiration of the current flat
penalty scheme that applies to any person who acts as a natural gas retailer without a valid natural gas
fuel retailer license, and delays by 2 years (from January 1, 2024, to January 1, 2026) the effective date
of a new penalty scheme that is based on a percentage of the tax assessed during the period of
unlicensed operations.
Delays by 2 years (from February 2024 to February 2026) the date by which natural gas fuel retailers
must file monthly reports with DOR for the purpose of determining the amount of natural gas fuel taxes
imposed.
The bill delays by 2 years the imposition of natural gas fuel taxes until January 1, 2026, resulting in delayed
collection of revenues from the taxes.
The bill provides an effective date of July 1, 2023. STORAGE NAME: h0529.ECC PAGE: 2
DATE: 3/3/2023
FULL ANALYSIS
I. SUBSTANTIVE ANALYSIS
A. EFFECT OF PROPOSED CHANGES:
Present Situation
Taxation of Natural Gas Fuel
Pre-2014
Prior to 2014, natural gas fuels such as compressed natural gas (CNG) and liquid petroleum gas (LPG)
were defined in Florida law as “alternative fuels” when used to fuel motor vehicles.
1
In lieu of the excise
tax imposed on diesel fuel under the law, owners or operators of Florida-licensed motor vehicles
powered by alternative fuels were required to pay an annual decal fee for each such vehicle.
2
These
annual fees ranged from $199.10 to $380.10 per vehicle, depending on the vehicle’s size and weight.
3
The sale of alternative fuels also was subject to sales tax imposed under ch. 212, F.S.
4
With certain exceptions, Florida law prohibited a person from acting as a retailer of alternative fuel
unless that person held a valid license as a retailer of alternative fuel issued by the Department of
Revenue (DOR).
5
Any person acting as such without a license was subject to a penalty of 25 percent of
the tax assessed on total purchases during the unlicensed period.
6
Every person who operated as a
retailer of alternative fuel, with certain exceptions, was required to report monthly to DOR and pay tax
on all fuel purchases.
7
Revenues from the annual decal fees were deposited into the State Alternative Fuel User Fee Clearing
Trust Fund.
8
After deducting a specified service charge, the proceeds in the trust fund were distributed
as follows:
One-half of the proceeds to the State Transportation Trust Fund (STTF).
50 percent of the remainder to the State Board of Administration for distribution in accordance
with the Florida Constitution.
25 percent of the remainder to the Revenue Sharing Trust Fund for Municipalities.
25 percent of the remainder to the counties for specified public transportation purposes,
distributed as provided by law.
Current Law
In 2013, the Legislature passed CS/CS/HB 579 to ““help reduce transportation costs in this state and
encourage freight mobility investments that contribute to the economic growth of the state.”
9
To
accomplish these goals, the bill created a 5-year rebate program for natural gas fuel fleet vehicles and
exempted natural gas fuels from state fuel taxes for 5 years. The Natural Gas Fuel Fleet Vehicle
Rebate program provided $6 million per fiscal year, from FY 2013-14 through FY 2017-18, to fund
rebates for the purchase, conversion, or lease of natural gas fuel fleet vehicles. Further, effective
January 1, 2014, the bill eliminated the annual decal fee for natural gas vehicles. The 2013 bill
replaced it with a new tax structure that creates a “per motor fuel equivalent gallon” tax rate to become
1
S. 206.86(4), F.S. (2012).
2
S. 206.877, F.S. (2012). The excise tax imposed on diesel fuel was applied to the purchase of alternative fuels by
operators of vehicles licensed in other states.
3
See Use of Natural Gas Fuels to Operate Motor Vehicles is Increasing in Florida, Office of Program Policy Analysis &
Government Accountability, Report No. 17-10 (Oct. 2017), at p. 4.
4
Id.
5
S. 206.89, F.S. (2012).
6
Id.
7
Id.
8
S. 206.879, F.S. (2012).
9
Ch. 2013-198, Laws of Fla. STORAGE NAME: h0529.ECC PAGE: 3
DATE: 3/3/2023
effective January 1, 2019.
10
In 2018, the legislature delayed the effective date of these taxes to
January 1, 2024.
Pursuant to the current structure, the following taxes will be imposed on natural gas fuel
11
effective
January 1, 2024:
12
An excise tax of 4 cents upon each motor fuel equivalent gallon
13
of natural gas fuel.
An additional tax of 1 cent upon each motor fuel equivalent gallon of natural gas fuel, which is
designated as the “ninth-cent fuel tax.”
An additional tax of 1 cent on each motor fuel equivalent gallon of natural gas fuel by each
county, which is designated as the “local option fuel tax.”
An additional tax on each motor fuel equivalent gallon of natural gas fuel, designated as the
“State Comprehensive Enhanced Transportation System (SCETS) Tax.” The tax rate must be
determined by DOR each calendar year, rounded to the nearest tenth of a cent, for the following
12-month period beginning January 1. The rate is calculated by adjusting the “initially
established tax rate of 5.8 cents per gallon” by the percentage change in the average of the
Consumer Price Index issued by the United States Department of Labor for the most recent 12-
month period ending September 30.
An additional tax on each motor fuel equivalent gallon of natural gas fuel “for the privilege of
selling natural gas fuel,” designated as the “fuel sales tax.” The tax rate must be determined by
DOR each calendar year, rounded to the nearest tenth, for the following 12-month period
beginning January 1. The rate is calculated by adjusting the “initially established tax rate of 9.2
cents per gallon” by the percentage change in the average of the Consumer Price Index issued
by the United States Department of Labor for the most recent 12-month period ending
September 30.
In sum, prior to any of the required annual index-based adjustments by DOR, natural gas fuel will be
taxed at a rate of at least $0.21 cents per motor fuel equivalent gallon beginning January 1, 2024.
14
Revenues from the natural gas fuel tax will be deposited into the State Alternative Fuel User Fee
Clearing Trust Fund to be distributed as follows:
15
The revenues from the SCETS tax and fuel sales tax will be transferred to the STTF.
The revenues from the excise tax will be distributed as follows:
o 50% will be transferred to the State Board of Administration for distribution in
accordance with the Florida Constitution.
o 25% will be transferred to the Revenue Sharing Trust Fund for Municipalities.
o 25% will be distributed to the counties for specified public transportation purposes,
distributed as provided by law.
The revenues from the ninth-cent fuel tax and the local option sales tax will be deposited into
the Local Alternative Fuel User Fee Clearing Trust Fund and returned monthly to the
appropriate counties.
10
Id. The provisions of the bill related to taxation of natural gas fuel are codified as Part V of Ch. 206, F.S., consisting of
Ss. 206.9951 – 206.998, entitled “NATURAL GAS FUEL.”
11
“Natural gas fuel” is defined as “any liquefied petroleum gas product, compressed natural gas product, or combination
thereof used in a motor vehicle as defined in s. 206.01(23). This term includes, but is not limited to, all forms of fuel
commonly or commercially known or sold as natural gasoline, butane gas, propane gas, or any other form of liquefied
petroleum gas, compressed natural gas, or liquefied natural gas. This term does not include natural gas or liquefied
petroleum placed in a separate tank of a motor vehicle for cooking, heating, water heating, or electric generation.” S.
206.9951(2), F.S.
12
S. 206.9955, F.S.
13
“Motor fuel equivalent gallon” is defined as “the volume of natural gas fuel it takes to equal the energy content of 1
gallon of motor fuel.” s. 206.9951(1), F.S. The conversion rates for various types of natural gas fuels is provided in s.
206.9955, F.S.
14
The law is unclear as to whether the index-based adjustments were to begin with the effective date of the law (January
1, 2014) or the effective date of the new tax rates (January 1, 2024).
15
S. 206.997, F.S. STORAGE NAME: h0529.ECC PAGE: 4
DATE: 3/3/2023
The law provides that until December 31, 2023, any person acting as a natural gas retailer without a
valid license to do so must pay a penalty of $200 for each month of operation without a license.
Effective January 1, 2024, the penalty becomes 25 percent of the tax assessed on total purchases
made during the unlicensed period.
16
In addition, the law requires natural gas fuel retailers to submit
an electronic, monthly report to DOR, beginning February 2024 and monthly thereafter, showing
information on inventory, purchases, nontaxable disposals, table uses, and taxable sales in gallons of
natural gas fuel for the preceding month, with certain exceptions and a specified deduction for services
rendered and expenses incurred in complying with the reporting requirements.
17
State Gasoline and Diesel Taxes
Motor Fuel
18
Florida law provides for the following taxes on motor fuel:
19
An excise or license tax of 2 cents per net gallon of motor fuel, designated as the “constitutional
fuel tax.”
An additional 1 cent per net gallon, designated as the “county fuel tax.”
An additional 1 cent per net gallon, designated as the “municipal fuel tax.”
An additional tax of 1 cent per net gallon may be imposed by each county, designated as the
“ninth-cent fuel tax.”
An additional tax of between 1 and 11 cents per net gallon may be imposed by each county,
designated as the “local option fuel tax.”
An additional tax per net gallon of motor fuel is imposed by each county, designated as the
SCETS Tax, at a rate calculated by applying specified index-based adjustments to a rate
specified in the law.
An additional tax per net gallon is imposed “on the privilege of selling motor fuel”, designated as
the “fuel sales tax,” at a rate calculated by applying specified index-based adjustments to an
initial rate established in the law.
An additional 0.125 cents per net gallon for defraying expenses incident to inspecting, testing,
and analyzing motor fuel in this state.
Beginning January 1, 2023, the state tax rate on motor fuel is 20.2 cents per gallon, the SCETS tax rate
on motor fuel is 8.6 cents, and the fuel sales tax rate on motor fuel is 15.1 cents. The local option rate
varies by county, and the total state and county rates on motor fuel varies from 35.2 cents to 41.3 cents
per gallon.
20
Diesel Fuel
21
Florida law provides for the following taxes on diesel fuel:
22
An excise tax of 4 cents per net gallon of diesel fuel.
An additional 1 cent per net gallon is imposed by each county, designated as the “ninth-cent
fuel tax.”
16
S. 206.9952(3), F.S.
17
S. 206.996, F.S.
18
“Motor fuel” is defined as “all gasoline products or any product blended with gasoline or any fuel placed in the storage
supply tank of a gasoline-powered motor vehicle.” S. 206.01(9), F.S.
19
S. 206.41(1), F.S,
20
Florida Department of Revenue, Tax Information Publication No. 22B05-06, Fuel Tax Rates Adjusted Beginning
January 1, 2023, (Nov. 17, 2022), available at: https://floridarevenue.com/taxes/tips/Pages/default.aspx.
21
“Diesel fuel” is defined as “all petroleum distillates commonly known as diesel #2, biodiesel, or any other product
blended with diesel or any product placed into the storage supply tank of a diesel-powered motor vehicle.” s. 206.86(1),
F.S.
22
S. 206.87(1), F.S. STORAGE NAME: h0529.ECC PAGE: 5
DATE: 3/3/2023
An additional 6 cents per net gallon is imposed by each county, designated as the “local option
fuel tax.”
An additional tax per net gallon is imposed in each county, designated as the SCETS Tax, at a
rate equal to the maximum SCETS Tax rate for motor fuel.
An additional tax per net gallon “on the privilege of selling diesel fuel,” designated as the “fuel
sales tax,” at a rate calculated by applying specified index-based adjustments to an initial rate
established in the law.
Beginning January 1, 2023, the state tax rate on diesel fuel is 20.2 cents per gallon and the county tax
rate (ninth cent, SCETS, and local option rates) is 15.9 cents statewide. The total state and county
rates on diesel fuel is 36.1 cents per gallon.
23
Effect of Proposed Changes
The bill provides for a 2-year delay of the imposition of natural gas fuel taxes that would otherwise go
into effect January 1, 2024. The bill changes the effective date of the imposition of these taxes to
January 1, 2026. Thus, state fuel taxes will not apply to natural gas fuels for an additional 2 years.
To conform to the delayed imposition of these taxes, the bill:
Extends by 2 years (from December 31, 2023, to December 31, 2025) the expiration of the
current flat penalty scheme that applies to any person who acts as a natural gas retailer without
a valid natural gas fuel retailer license, and delays by 2 years (from January 1, 2024, to January
1, 2026) the effective date of a new penalty scheme that is based on a percentage of the tax
assessed during the period of unlicensed operations.
Delays by 2 years (from February 2024 to February 2026) the date by which natural gas fuel
retailers must file monthly reports with DOR for the purpose of determining the amount of
natural gas fuel taxes imposed.
The bill provides an effective date of July 1, 2023.
B. SECTION DIRECTORY:
Section 1. Amends s. 206.9952, F.S., relating to licensing of natural gas fuel retailers.
Section 2. Amends s. 206.9955, F.S., relating to the levy of natural gas fuel tax.
Section 3. Amends s. 206.996, F.S., relating to monthly reports by natural gas fuel retailers.
Section 4. Provides an effective date of July 1, 2023.
II. FISCAL ANALYSIS & ECONOMIC IMPACT STATEMENT
A. FISCAL IMPACT ON STATE GOVERNMENT:
1. Revenues:
On February 3, 2023, the Revenue Estimating Conference adopted a negative fiscal impact of
$200,000 to state revenues for fiscal year (FY) 2023-2024, $700,000 for FY 2024-2025, and
$500,000 for FY 2025-2026.
24
2. Expenditures:
23
Supra note 20.
24
Office of Economic and Demographic Research, Revenue Estimating Conference, 02/03/2023 Revenue Impact
Results, p. 39, available at http://edr.state.fl.us/content/conferences/revenueimpact/index.cfm. STORAGE NAME: h0529.ECC PAGE: 6
DATE: 3/3/2023
None.
B. FISCAL IMPACT ON LOCAL GOVERNMENTS:
1. Revenues:
On February 3, 2023, the Revenue Estimating Conference adopted a negative fiscal impact of
$100,000 to local revenues for FY 2023-2024, $200,000 for FY 2024-2025, and $100,000 for FY
2025-2026.
2. Expenditures:
None.
C. DIRECT ECONOMIC IMPACT ON PRIVATE SECTOR:
Owners or operators of natural gas vehicles will achieve cost savings, because the bill delays by 2
years the imposition of natural gas fuel taxes until January 1, 2026.
25
D. FISCAL COMMENTS:
Current law provides that the SCETS tax rate and the fuel sales tax rate for natural gas fuels must be
calculated annually by DOR through index-based adjustments to an initial rate established in the law.
The law is not clear as to when those index-based adjustments must begin and could be interpreted to
require such adjustments either from the time the law became effective or from the time the taxes
become effective. An estimate of the bill’s fiscal impact will depend upon the interpretation of these
provisions.
III. COMMENTS
A. CONSTITUTIONAL ISSUES:
1. Applicability of Municipality/County Mandates Provision:
Not applicable. The bill does not appear to: require counties or municipalities to spend funds or take
action requiring the expenditures of funds; reduce the authority that counties or municipalities have
to raise revenues in the aggregate; or reduce the percentage of state tax shared with counties or
municipalities.
2. Other:
None.
B. RULE-MAKING AUTHORITY:
None.
C. DRAFTING ISSUES OR OTHER COMMENTS:
Current law provides that the SCETS tax rate and the fuel sales tax rate for natural gas fuels must be
calculated annually by DOR through index-based adjustments to an initial rate established in the law.
The law is not clear as to when these index-based adjustments must begin and could be interpreted to
require such adjustments either from the time the law became effective or from the time the taxes
become effective. The bill does not amend these provisions of the law. To ensure that the intended tax
rate becomes effective at the intended time, this ambiguity could be clarified.
25
Id. STORAGE NAME: h0529.ECC PAGE: 7
DATE: 3/3/2023
IV. AMENDMENTS/COMMITTEE SUBSTITUTE CHANGES