An Act 1'0 Reform Maine's Motor Fuel Tax Laws
Maine Legislature, Session 124, LD 1341
Committee: Taxation
Sponsors: CROCKETT, PERRY, CAREY, HOGAN, MAZUREK, PEOPLES, PILON, VALENTINO, WATSON, DAMON
Amends: 36 MRSA §2903, 36 MRSA §3203, 36 MRSA §320

MAINE STATE LEGISLATURE 
The following document is provided by the 
LAW AND LEGISLATIVE DIGITAL LIBRARY 
at the Maine State Law and Legislative Reference Library 
http://legislature.maine.gov/lawlib 
Reproduced from scanned originals with text recognition applied 
(searchable text may contain some errors and/or omissions) 
I, 
~ 
I' 
I 
r'---'"" 
( ) 
( 
"--,.---' 
:-::!Y'1,l\C=U 
!\~/1r'.I mr:£i.PV 
~ ". 
H...... 
" ." "----1"1. '.< , • 
AUGUSTA, IVIAllVe 
124th MAl E LEGISLATURE 
FIRST REGULAR SESSIOr~-2009 
Legislative Documeilt 
No. 1341 
H.P.942 
House of Representatives, March 31, 2009 
An Act 1'0 Reform Maine's Motor Fuel Tax Laws 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative CROCKETT of Augusta. 
Cosponsored by Senator PERRY of Penobscot and 
77/~ 
1/1. 71!d£~{ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: CAREY of Lewiston, HOGAN of Old Orchard Beach, MAZUREK of 
Rockland, PEOPLES of Westbrook, PILON of Saco, VALENTINO of Saco, WATSON of 
Bath, Senator: DAMON of Hancock. 
Printed on recycled pllper 
Be it enacted by the People ofthe State of Maine as follows: 
Sec. 1. 36 MRSA §2903, sub-§l, as amended by PL 2001, c. 688, §1, is further 
amended to read: 
1. Excise tax imposed. An excise tax is imposed on internal combustion engine fuel 
used or sold within this State, including sales to the State or a political subdivision of the 
State, at the rate of 2,2.¢-lli per gallon, except that the rate is 3.4¢ per gallon on internal 
combustion engine fuel, as defined in section 2902, bought or used for the purpose of 
propelling jet or turbojet engine aircraft. The tax rate provided by this section is subject 
to annual inflation adjustment pursuant to section 3321 eJtCept with respect to the tax 
imposed upon fuel bought or used for the purpose of propelling jet or turbojet engine 
aircraft. 
Sec. 2. 36 MRSA §2903, sub-§l-D is enacted toread: 
I-D. 
Price-based component. 
Beginning in 2010, and each calendar year 
thereafter, the State Tax Assessor shall calculate a price-based component that must be 
added to the excise tax imposed pursuant to subsection 1, as determined according to this 
subsection. 
A. The tax imposed pursuant to subsection 1 must be subtracted from the average per 
gallon retail price of regular gasoline for New England for the immediately preceding 
calendar year as published by the United States Department of Energy, Energy 
Information Administration. The result is multiplied by 5% and rounded to the 
nearest 1110 of a cent. 
B. Except for the initial determination of the price-based component in 2010, the 
change in the price-based component may not increase the total excise tax imposed 
pursuant to this section by more than 10% per year. 
C. The price-based component must be added to the excise tax imposed pursuant to 
subsection 1 and becomes effective on the July 1 st immediately following the 
calculation. 
Sec. 3. 36 MRSA §2903, sub-§6, as reallocated by RR 2007, c. 2, §21, IS 
amended to read: 
6. Deposit to trust fund. Beginning July 1, 2009 and ending June 30, 2010, the 
Treasurer of State shall deposit monthly into the TransCap Trust Fund established in Title 
30-A, section 6006-G 7.5% of the excise tax after the distribution of taxes pursuant to 
section 2903-D imposed under subsection 1. Beginning July 1, 2010, the Treasurer of 
State shall deposit monthly into the TransCap Trust Fund, after the distribution of taxes 
pursuant to section 2903-D imposed under subsection 1: 
A. Seven and one-half percent of the excise tax imposed under subsection 1; 
B. The first 8¢ per gallon of excise tax imposed under subsection I-D; and 
C. 
Seventy percent of the excise tax in excess of 8¢ per gallon imposed under 
subsection I-D. 
) 
,) 
) 
() 
( 
Sec. 4. 36 MRSA §3203, sub-§l-B, as enacted by PL 2007, c. 650, §2, is 
amended to read: 
I-B. Generally; rates beginning July 1,2008 and ending June 30, 2010. Except 
as provided in section 3204-A, beginning July 1, 2008 and ending June 30, 2010, an 
excise tax is levied and imposed on all suppliers of distillates sold, on all retailers of low-
energy fuel sold and on all users of special fuel used in this State for each gallon of 
distillate at the rates provided in this subsection. Tax rates for each gallon of low-energy 
fuel are based on the British Thermal Unit, referred to in this subsection as "BTU," 
energy content for each fuel as based on gasoline gallon equivalents or the comparable 
measure for distillates. The gasoline gallon equivalent is the amount of alternative fuel 
that equals the BTU energy content of one gallon of gasoline. In the case of distillates, 
the tax rate provided by this section is subj ect to annual inflation adjustment pursuant to 
section 3321. For purposes of this subsection, "base rate" means the rate in effect for 
gasoline or diesel on July 1 st of each year as indexed under section 3321. 
A. This paragraph establishes the applicable BTU values and tax rates based on 
gasoline gallon equivalents. 
Fuel type based on gasoline BTU content per gallon or Tax rate formula (BTU 
Gasoline 
Propane 
Compressed Natural Gas 
(CNG) 
Methanol 
Ethanol 
Hydrogen 
Hydrogen Compressed 
Natural Gas 
gasoline gallon equivalent 
value fuel/BTU value 
115,000 
84,500 
115,000 
56,800 
76,000 
115,000 
115,000 
gasoline) x base rate 
gasoline 
100% x base rate 
73% x base rate 
100% x base rate 
49% x base rate 
66% x base rate 
100% x base rate 
100% x base rate 
B. This paragraph establishes the applicable BTU values and tax rates based on 
distillate gallon equivalents. 
Fuel type based on diesel 
Diesel 
Liquified Natural Gas 
(LNG) 
Biodiesel 
BTU content per gallon or Tax rate formula (BTU 
gallon equivalent 
value fuel/BTU value 
diesel) x base rate diesel 
128,400 
73,500 
118,300 
100% x base rate 
57% x base rate 
92% x base rate 
C. The conversion factors established in this paragraph must be used in converting to 
gasoline gallon equivalents. 
(1) For compressed natural gas, BTUs per 100 standard cubic feet is 93,000, and 
there are 123.66 standard cubic feet per gasoline gallon equivalent. 
(2) For hydrogen, BTUs per 100 standard cubic feet is 27,000, and there are 
425.93 standard cubic feet per gasoline gallon equivalent. 
(3) For hydrogen compressed natural gas, BTUs per 100 standard cubic feet is 
79,800, and there are 144.11 standard cubic feet per gasoline gallon equivalent. 
Sec. 5. 36 MRS A §3203, sub-§l-C is enacted to read: 
I-C. Generally; rates beginning July 1, 2010. 
Except as provided in section 
3204-A, beginning July 1, 2010, an excise tax is levied and imposed on all suppliers of 
distillates sold, on all retailers of low-energy fuel sold and on all users of special fuel 
used in this State for each gallon of distillate at the rate of 21 ¢ per gallon plus a price-
based component as provided in subsection I-D. Tax rates for each gallon of low-energy 
fuel are based on the British Thermal Unit, referred to in this subsection as "BTU," 
energy content for each fuel as based on gasoline gallon equivalents or the comparable 
measure for distillates. The gasoline gallon equivalent is the amount of alternative fuel 
that equals the BTU energy content of one gallon of gasoline. For purposes of this 
subsection, "base rate" means the excise tax imposed pursuant to this subsection, 
including the price-based component specified in subsection I-D, in effect on July 1 st of 
each year. 
A. This paragraph establishes the applicable BTU values and tax rates based on 
gasoline gallon equivalents. 
Fuel type based on gasoline BTU content per gallon or Tax rate formula (BTU 
. 
gasoline gallon equivalent 
value fueVBTU value 
Gasoline 
Propane 
Compressed Natural Gas 
(CNG) 
Methanol 
Ethanol 
Hydrogen 
Hydrogen Compressed 
Natural Gas 
115,000 
84,500 
115,000 
56,800 
76,000 
115,000 
115,000 
gasoline) x base rate 
gasoline 
100% x base rate 
73% x base rate 
100% x base rate 
49% x base rate 
66% x base rate 
100% x base rate 
100% x base rate 
B. This paragraph establishes the applicable BTU values and tax rates based on 
distillate gallon equivalents. 
Fuel type based on diesel 
Diesel 
Liquified Natural Gas 
(LNG) 
Biodiesel 
BTU content per gallon or Tax rate formula (BTU 
gallon equivalent 
value fueVBTU value 
diesel) x base rate diesel 
128,400 
73,500 
118,300 
100% x base rate 
57% x base rate 
92% x base rate 
) 
) 
) 
() 
C. The conversion factors established in this paragraph must be used in converting to 
gasoline gallon equivalents. 
(1) For compressed natural gas, BTUs per 100 standard cubic feet is 93,000, and 
there are 123.66 standard cubic feet per gasoline gallon equivalent. 
(2) For hydrogen, BTUs per 100 standard cubic feet is 27,000, and there are 
425.93 standard cubic feet per gasoline gallon equivalent. 
(3) For hydrogen compressed natural gas, BTUs per 100 standard cubic feet is 
79,800, and there are 144.11 standard cubic feet per gasoline gallon equivalent. 
Sec. 6. 36 MRSA §3203, sub-§l-D is enacted to read: 
I-D. 
Price-based component. 
Beginning in 2010, and each calendar year 
thereafter, the State Tax Assessor shall calculate a price-based component that must be 
added to the excise tax imposed pursuant to subsection I-C, as determined according to 
this subsection. 
A. The tax imposed pursuant to subsection l-C must be subtracted from the average 
per gallon retail price of diesel fuel for New England for the immediately preceding 
calendar year as published by the United States Department of Energy, Energy 
Information Administration. The result is multiplied by 5% and rounded to the 
nearest 1110 of a cent. 
B. Except for the initial determination of the price-based component in 2010, the 
change in the price-based component may not increase the total excise tax imposed 
pursuant to this section by more than 10% per year. 
C. The price-based component must be added to the excise tax imposed pursuant to 
subsection I-C and becomes effective on the July 1 st immediately following the 
calculation. 
Sec. 7. 36 MRS A §3203, sub-§4, as amended by PL 2007, c. 538, Pt. L, §2, is 
repealed and the following enacted in its place: 
4. Highway Fund. All taxes and fines collected under this chapter must be credited 
to the Highway Fund, except that: 
A. Beginning July 1, 2009 and ending June 30, 2010, the Treasurer of State shall 
deposit monthly into the TransCap Trust Fund established in Title 30-A. section 
6006-G 7.5% of the excise tax imposed under subsection loB; and 
B. Beginning July 1, 2010, the Treasurer of State shall deposit monthly into the 
TransCap Trust Fund 7.5% of the excise tax imposed under subsection l-B plus the 
first 8¢ per gallon of the excise tax imposed pursuant to subsection l-D and 70% of 
the excise tax in excess of 8¢ per gallon of the excise tax imposed pursuant to 
subsection I-D. 
Sec. S. 36 MRSA §320S, first err, as amended by PL 2007, c. 438, §78, is further 
amended to read: 
Every user subject to the tax imposed by section 3203 is entitled to a credit on the 
tax, equivalent to the then current rate of taxation per gallon imposed by section 3203 as 
adjusted pursuant to seotion 3321, on all special fuel purchased by that user from a 
supplier or retailer licensed in accordance with section 3204 upon which the tax imposed 
by section 3203 has been paid. Evidence of the payment of that tax, in a form required by 
or satisfactory to the State Tax Assessor, must be furnished by each user claiming the 
credit. When the amount of the credit to which any user is entitled for any quarter 
exceeds the amount of the tax for which that user is liable for the same quarter, the excess 
may be allowed as a credit on the tax for which that user would be otherwise liable for 
another quarter or quarters. Upon application to the assessor, the excess may be refunded 
if the applicant has paid to another state or province under a lawful requirement of that 
jurisdiction a tax similar in effect to the tax imposed by section 3203 on the use or 
consumption of that fuel outside the State, at the same rate per gallon that tax was paid in 
this State, but in no case to exceed the then current rate per gallon of the tax imposed by 
section 3203 as adjusted pursuant to seotion 3321. Upon receipt of the application the 
assessor, if satisfied after investigation that a refund is justified, shall so certify to the 
State Controller. The refund must be paid out of the Highway Fund. This credit lapses at 
the end of the last quarter of the year following that in which the credit arose. 
Sec. 9. 36 MRSA c. 465, as amended, is repealed. 
SUMMARY 
This bill restructures the excise tax imposed on motor fuels by: 
1. Reducing the motor fuel excise tax imposed on gasoline from the current inflation 
adjusted rate of 28.4¢ per gallon to 21 ¢ per gallon and on diesel fuel from the current 
inflation adjusted rate of29.6¢ per gallon to 21¢ per gallon; 
2. Creating a price-based excise tax component to be added to the excise tax on 
gasoline and diesel fuel. The new component is determined annually beginning in 2010 
and is based on the average retail price of gasoline or diesel fuel for New England for the 
previous year. 
The maximum increase in the overall excise tax is limited to 10% 
annually, except for the first year of implementation; 
3. Repealing the annual indexing of motor fuels to the rate of inflation; and 
4. Transferring 8¢ per gallon and 70% of the amount in excess of 8¢ of the price-
based excise tax component to the TransCap Trust Fund. 
) 
) 
,)