MOTOR VEHICLE FUEL TAX EXEMPTIONS

82.36.020 LOSSES SUSTAINED IN HANDLING

Description: This statute allows a deduction of 0.25 percent of the net taxable gallonage distributed by licensed distributors prior to computation of the gas tax, for losses sustained in handling.

Purpose: The deduction is intended to offset fuel losses resulting from handling and evaporation.

Category/Year Enacted: Economic development; 1939.

Primary Beneficiaries: Wholesale fuel distributors.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 1,560 1,571 1,592 1,614
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? Yes.

82.36.230 EXPORTED AND IMPORTED FUEL

82.38.030

Description: Fuel imported into the state in interstate or foreign commerce which is intended to be sold while in interstate or foreign commerce and any fuel exported from the state are exempt from motor vehicle fuel tax.

Purpose: To recognize the prohibition of taxing items in interstate or foreign commerce.

Category/Year Enacted: Commerce; 1933.

Primary Beneficiaries: Distributors of fuel.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 733,680 741,017 751,391 761,911
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? No.

82.36.230 SALES TO THE MILITARY

Description: The federal government is exempt from motor vehicle fuel tax on fuel sold for military purposes.

Purpose: To recognize the prohibition of taxing the federal government.

Category/Year Enacted: Government; 1933.

Primary Beneficiaries: The U.S. government.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 92 93 94 96
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? No.

82.36.245 FOREIGN GOVERNMENTS

Description: Exemption from fuel tax is allowed for employees and representatives of foreign governments if that country grants similar fuel tax exemptions to employees of the U.S. government. The U.S. State Department determines which foreign consulates are eligible.

Purpose: The purpose is to avoid taxing foreign governments.

Category/Year Enacted: Government; 1967 (amended in 1989 to allow outright exemption instead of a refund).

Primary Beneficiaries: Persons employed by foreign governments.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 6 6 6 6
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? Unlikely.

82.36.275 URBAN TRANSPORTATION SYSTEMS

82.38.080

Description: Exempts from motor vehicle and special fuel taxes public transportation systems which operate within 15 miles of the city limits from which the trip originated.

Purpose: The purpose is to support public transportation systems.

Category/Year Enacted: Government; 1957.

Primary Beneficiaries: Public and privately operated urban transportation systems and bus patrons.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 3,217 3,250 3,295 3,341
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? Yes.

82.36.280(1) NONHIGHWAY USES OF FUEL

Description: This statute allows refunds of motor vehicle fuel tax when such fuel is used off the highway by vehicles that are not licensed for highway use.

Purpose: Under the 18th Amendment to the state constitution, fuel tax receipts can only be used for highway purposes. Therefore, this refund assures that the tax only applies to fuel used on the public highways.

Category/Year Enacted: Not intended in the tax base; 1923.

Primary Beneficiaries: Nonhighway users of fuel: boaters, farmers, off-road vehicles, log haulers, construction firms, etc.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 1,438 1,448 1,467 1,487
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? Unlikely; although it is possible that a similar gas tax could apply to fuel used off the public highways and the revenues could be used for nonhighway purposes.

82.36.285 TRANSPORTATION OF PERSONS WITH SPECIAL NEEDS

Description: Exempts fuel used by private, nonprofit organizations which provide transportation services for persons with special transportation needs.

Purpose: To support elderly and handicapped transportation programs.

Category/Year Enacted: Nonprofit - health or social welfare; 1983.

Primary Beneficiaries: Private, nonprofit transportation providers and the persons they serve.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 451 454 460 467
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? Yes.

82.36.300 REFUNDS, EXPORTED GASOLINE

Description: Allows a refund of fuel tax on motor vehicle fuel that has been exported from the state and on which the fuel tax has already been paid. NOTE: the impact of this exemption has increased significantly as a result of the tax at the "rack" effective January 1, 1999. Because fuel is now subject to tax at the supplier level instead of only the wholesaler level, exported fuel sold by suppliers is eligible for a refund.

Purpose: The purposes are to avoid taxing interstate commerce, to avoid double taxation and to encourage export commerce.

Category/Year Enacted: Commerce; 1923.

Primary Beneficiaries: Fuel distributors.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 401,746 404,558 409,817 415,555
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? No.

82.36.305 MARINE USES

Description: Allows refunds to fuel dealers of fuel tax paid on motor vehicle fuel delivered exclusively for marine use.

Purpose: The purpose is to limit the fuel tax to highway users, since the tax receipts are restricted to highway purposes, according to the 18th Amendment of the state constitution.

Category/Year Enacted: Not intended in the tax base; 1957.

Primary Beneficiaries: Fuel dealers and marine fuel users.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 377 379 384 390
Local taxes - - - - - - - -

If the refund were repealed, would the estimated revenue be realized? Unlikely; although it is possible that a similar gas tax could be imposed on fuel that is not used on the public highways with the revenue dedicated to another purpose.

82.36.370 LOST OR DESTROYED FUEL

82.38.180

Description: Refunds of fuel tax are made in instances where fuel is lost or destroyed "through fire, lightning, flood, wind storm, or explosion."

Purpose: The purpose is evidently to avoid imposition of the tax when no income is realized or taxable sale takes place.

Category/Year Enacted: Economic development; 1923.

Primary Beneficiaries: Fuel distributors, although refunds are rarely claimed.

Conflict With Other Programs: None evident.

Tax Savings ($000): Minimal.

82.38.080 SPECIAL FUEL TAX EXEMPTIONS

Description: This statute provides a number of exemptions from special fuel tax (propane, natural gas, etc.). The major exemptions include: (1) heating oil; (2) state, local and federal government vehicles; (3) urban transportation systems; and (4) power take-off units (i.e., pumping units on trucks).

Purpose: The purposes include avoidance of double taxation (heating oil is subject to retail sales tax), not taxing government, and support of public transportation.

Category/Year Enacted: Other; 1971.

Primary Beneficiaries: Government, urban transportation systems and their customers, purchasers of heating oil.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 12,593 12,857 13,101 13,276
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? Unlikely; the estimate includes heating oil which is already subject to retail sales tax. Most of the remainder is attributable to public transit systems which could be subject to special fuel tax, but an increase in other taxes or fares would result.

82.38.082 LOGGING ROAD CONSTRUCTION

Description: Exemption from special fuel tax is provided for fuel used in logging road construction which is required by the federal government for the use of roads within certain federal forest areas.

Purpose: The federal government requires logging firms that use certain logging roads in national forests to either pay a fee or to assist with construction and maintenance of the roads. Fuel used in such construction is exempt from special fuel tax.

Category/Year Enacted: Economic development; 1987.

Primary Beneficiaries: Logging companies.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 10 10 10 10
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? Yes.

82.42.020 CROP DUSTING

Description: The statute which imposes the aircraft fuel tax (currently six cents per gallon) contains a proviso that exempts aircraft fuel used in spraying of crops, if the plane normally flies from a private airport.

Purpose: To lower the tax burden on agriculture. Also, the exemption can be justified on the grounds of equity, since fuel used in tractors and other agricultural implements is not subject to motor vehicle fuel tax (although it is subject to sales tax).

Category/Year Enacted: Agriculture; 1982.

Primary Beneficiaries: Farmers.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 105 105 105 105
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? Yes.

82.42.030 COMMERCIAL AND OTHER AIRCRAFT

Description: This statute exempts commercial aircraft (interstate and local commuter carriers) and other specified users of aircraft fuel, including aircraft used for testing and training, from the aircraft fuel tax.

Purpose: The purposes apparently are to exclude commercial airlines from aircraft fuel tax and to encourage testing of aircraft and training of flight crews in Washington.

Category/Year Enacted: Economic development; 1967.

Primary Beneficiaries: Commercial and commuter airlines and their patrons; aircraft manufacturers.

Conflict With Other Programs: Yes. Aircraft fuel tax revenues fund the State Aeronautics Division. These exemptions place the burden of paying for search and rescue activities carried out by the Division on a narrow group of aircraft fuel users--essentially private owners of aircraft that are used for noncommercial purposes.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 33,322 32,968 33,628 34,300
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? Yes; although the tax for interstate carriers might have to be apportioned, in order to tax only the portion of fuel consumed in-state.

82.42.070 IMPORTED & EXPORTED AIRCRAFT FUEL

Description: The aircraft fuel tax does not apply to fuel imported into the state in interstate or foreign commerce and intended to be sold while in interstate or foreign commerce, nor to aircraft fuel exported from this state.

Purpose: The purpose is to avoid taxing items in interstate or foreign commerce.

Category/Year Enacted: Commerce; 1967.

Primary Beneficiaries: Aircraft fuel distributors and users.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 21,030 21,451 21,880 22,318
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? No.

82.42.070 AIRCRAFT FUEL, FEDERAL GOVERNMENT

Description: The aircraft fuel tax does not apply to fuel sold to the United States government or any agency of the federal government.

Purpose: The purpose is to conform to federal law prohibiting states from taxing the federal government.

Category/Year Enacted: Government; 1971.

Primary Beneficiaries: The federal government.

Conflict With Other Programs: None evident.

Tax Savings ($000): FY 2000 FY 2001 FY 2002 FY 2003
State taxes 9,900 10,098 10,300 10,506
Local taxes - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? No.