In the context of rapidly increasing diesel fuel prices, two bills currently in the US Congress propose reducing the $0.24/gallon federal tax on diesel fuel by $0.061 per gallon, thereby dropping it down to $0.183 per gallon, just slightly below the federal gasoline tax rate of $0.184 per gallon.
|Although the federal tax on diesel is constant, state taxes vary widely. Click to enlarge.|
Senator Olympia Snowe (R-ME) introduced The Diesel Tax Parity Act of 2008 (S. 2896), which calls for the reduction in the federal tax on diesel fuel to 18.3 cents per gallon until 31 December 2008. Congresswoman Mary Bono Mack (R-CA) introduced the Diesel Tax Fairness Act (H.R. 6106), proposing the same reduction to $0.183, with an expiration of 31 December 2010.
The nationwide average tax (including federal and state excise taxes and other taxes) on motor diesel fuel as of January 2008 was $0.536, an increase of 0.7 cents from July 2007, according to the American Petroleum Institute (API). The nationwide average tax on gasoline was $0.470 cents per gallon as of January 2008, up 0.1 cents from July 2007.
Other taxes include applicable sales taxes, gross receipts taxes, oil inspection fees, underground storage tank fees and other miscellaneous environmental fees. Adding these taxes and fees to the state excise taxes results in a volume-weighted average state tax of 29.2 cents per gallon, according to the API.