97-065
Response
November 18, 1997
October
13, 1997
Dear
Commissioner Oveson:
I
am writing on behalf of one of our marketer members, COMPANY A in Utah.
In
1993-94, he sold 380,000 plus gallons a month to the COMPANY B (COMPANY B).
NAME was forced to buy a new, larger truck so they could haul more fuel and be
able to fuel at two locations. In March
1995, the COMPANY B created a job for one individual to be responsible for the
fueling of locomotives. The purpose is to cut costs and determine least expensive
fueling locations.
During
1993-94, Utah's fuel prices were competitive with the surrounding states. Now,
with the imposed Utah State sales tax on diesel fuel, Utah's prices are higher
than in surrounding states by the sales tax imposed on locomotives. Due to the cost difference, COMPANY B will
not fuel their locomotives in Utah.
Westbound trains fuel in CITY or CITY, STATE, eastbound trains are
fueled in CITY, STATE and southbound trains fuel in CITY, STATE.
As
a result. COMPANY A has sold fewer and fewer gallons to the locomotives. What
was once 380,000 gallons of fuel sold per month has dropped well over half to
108,000 - 150,000 gallons per month.
Utah's economy is losing business and money.
A
solution to this problem might be the following. If the Utah State Sales Tax was exempted from fueling of
locomotives, Utah would be on a level playing field with the surrounding
states. COMPANY B could resume fueling in Utah because it is more accommodating
to their needs. The loss of sales tax from these purchases could be offset by
the additional taxes collected by the creation of additional jobs to handle the
increase in fuel sales.
The
State needs to consider its loss and the loss of Utah fuel marketers, such as
NAME, and exempt the sales tax on fuels for locomotives.
I
appreciate your time and attention to this matter. If you have any questions, please feel free to
contact
me at your convenience.
Sincerely,
NAME
Regulatory
Affairs Director
November
18, 1997
NAME
ADDRESS
CITY
STATE ZIP
Advisory
Opinion - Tax on sales of diesel fuel for use in locomotives
Dear
NAME,
We have received your request for
tax guidance pertaining to the tax on diesel fuel purchased for use in
locomotives. We offer the following:
No special fuel tax is imposed or
collected upon dyed diesel fuel that is sold and used for any purpose other
than to operate or propel a motor vehicle on public highways. However, fuel that is exempt from the
special fuels tax is subject to sales tax.
With regard to the special fuels
tax, COMPANY A may purchase non-taxable dyed diesel fuel for use in
locomotives. If COMPANY A is purchasing
diesel fuel for both taxable and non- taxable use, it must purchase taxable undyed
fuel. However, it is eligible for a
refund on taxes paid on fuel that is actually sold and used to operate
locomotives. In that case, COMPANY A
must document the distribution of tax
exempt fuel for off highway uses on its return or refund request.
You have raised a concern about tax
exemptions on fuels in surrounding states.
We understand your concerns, but the Tax Commission has no authority to
legislate or to create tax exemptions.
This matter should be addressed with the state legislature.
Please let us know if you have other
questions.
For
the Commission,
Joe
B. Pacheco,
Commissioner
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