Alabama senators Thursday approved legislation to change the way motor fuel road taxes are collected on natural gas sold in the state.
If signed by Gov. Robert Bentley, the measure would suspend the motor fuel road tax decal program administered by the LP Gas Board for CNG vehicles that fuel in the state. The bill would provide a tax holiday for natural gas used in vehicles and give state agencies until Oct. 1, 2016, to develop a program to collect motor fuel road taxes at the point of purchase for CNG and LNG.
In addition to moving tax collection to the pump, the legislation also establishes standards for the sale and taxation of CNG and LNG based on energy equivalency with gasoline and diesel (5.66 lbs of CNG = 1 gasoline gallon equivalent and 6.06 lbs of LNG = 1 diesel gallon equivalent).
The Alabama Senate approved the measure today in a 29-0 vote. The House of Representatives approved the measure March 18 in a 101-0 vote.
Only 300 CNG vehicles in Alabama currently have decals, which are purchased at a rate of $75 to $150 a year. The current decal program is difficult to implement on out-of-state CNG vehicles and does not cover LNG vehicles. The legislation would tax CNG and LNG in the same fashion as gasoline and diesel.
“This legislation creates a level playing field, and it will help expand the market for alternative fuels,” says Phillip Wiedmeyer, president of the Alabama Clean Fuels Coalition. “It will ensure that Alabama doesn’t lose motor fuel tax revenue as more companies and individuals shift from traditional fuels to cleaner-burning, domestically produced alternatives.”