Summary description of highway-related revenue provisions of the Highway Revenue Act of 1982 (title V of the Surface Transportation Assistance Act of 1982; H.R. 6211) : as passed by the House and the Senate (Volume JCX-60-82) online

SUMMARY DESCRIPTION
OP
HIGHWAY-RELATED REVENUE PROVISIONS
OF THE
HIGHWAY REVENUE ACT OF 1982

(Title V of the Surface Transportation
Assistance Act of 1982; H.R. 6211)

As Passed by the House and the Senate

Prepared by the Staff

of the

Joint Committee on Taxation

December 23, 1982
JCX-60-82



CONTENTS



Page

Introduction 1

I. Summary Description 2

A. Motor Fuels Taxes — -— 2

1. Tax rates — — 2

2. Exemptions — — — — : '2 X

3. Alcohol fuels income tax credit- ~~ — 3

4. Tariff on imported alcohol fuels - - 3

5. Time for payment of gasoline tax— — 3

B. Taxes on Trucks and Truck Parts — 4

1. Trucks — 4

2. Truck parts - - - — — - — — — 4

C. Heavy Vehicle Use Tax - -— ■ — — 5

D. Taxes on Tires, Tread Rubber, and Inner

Tubes- — — - - - — >- — - — . 7

1. Tires — — 7

2. Tread rubber — — , 7

3. Inner tubes - — ~ - - L___. — „__= — __ 7

E. Tax on Lubricating Oil—'— — — 7

F. Floor Stocks Provisions - —-———— — — 8

1. Floor stocks taxes - - — ■ 8

2. Floor stocks refunds — — 8

G. Highway Trust Fund - - — 9

1. Extension of the trust fund — 9

2. Revenues appropriated to the trust

fund - 9

3. Expenditures and transfers from the

trust fund â–  9

4. Anti-deficit provision ("Byrd

amendment" ) — ■ 10

H. Mass Transit Account 11

II. Estimated Revenue Effects 12



INTRODUCTION



This document, prepared by the staff of the Joint
Committee on. Taxation, provides a summary description of the
highway-related revenue provisions of the Highway Revenue Act
of 1982 (Title V of the Surface Transportation Assistance Act
of 1982; H.R. 6211) as pased by the House and the Senate.
The nonhighway-related tax provisions of the Act are not
described in this document.

The conference report on H.R. 6211 was filed in the
House (H. Rep. No. 97-987) and the Senate (S. Rep. No.
97-692) on December 21, 1982, and was pased by the House on
December 21. The conference report was passed by the Senate
on December 23, 1982.



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I. SUMMARY DESCRIPTION

A. Motor Fuels Taxes

1. Tax Rates —~-~-

The Act increases the present 4-cent-per-ga.l.lon taxes on •
gasoline, diesel fuel, and special motor fuels to 9 cents per
gallon, effective for sales after March 31, 1983, and before
October 1, 1988. The taxes terminate on October 1, 1988.

The taxes imposed on gasoline and special motor fuels
used in motorboats are also increased from 4 cents per gallon
to 9 cents per gallon during the same period. Revenues
equivalent to the amounts received from these taxes will
continue to be deposited in the National Recreational Boating
Safety and Facilities Improvement Fund and the Land and Water •
Conservation Fund. The maximum amount per year that can be
transferred to the Boating Safety Fund is increased from $20
million per year to $45 million per year and the maximum
allowable balance in the Fund is increased to that same
amount. Finally, the Boating Safety Fund is extended through
September 30, 1988.

2. Exemptions

The Act continues or modifies most of the exemptions
from the fuels taxes and enacts a new exemption for certain
alcohol fuels. Unless otherwise indicated below in the
description of a specific exemption, all new exemptions are
effective on April 1, 1983, and through September 30, 1988.
Under the Act, the following exemptions are provided:

Gasohol, — The Act increases the present 4-cents-per-
gallon exemption to 5 cents per gallon, effective from April
1, 1983 through December 31, 1992.

Intercity, school, a n d local buses . — The Act continues
the present full exemption from the fuels taxes for fuels
used in these vehicles by increasing that exemption from 4
cents per gallon to 9 cents per gallon.

Qualified taxicabs . — The present 4-cents-per-gallon
exemption is increased to 9 cents per gallon, from January 1,
1933, through September 30, 1984. Additionally, certain
taxicabs prohibited by local law from offering ridesharing
will qualify for the exemption from January 1, 1983, through
December 31, 1983.

State and local governments and nonprofit educational
institutions . — An exemption of 9 cents per gallon is provided
for fuels sold for the exclusive use of these entities.



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Farming use . — The exemption for fuels used on farms for
farming purposes is increased from 4 cents per gallon to 9
cents per gallon.

Off-highway business use . — The exemption for fuels used
in off-highway business uses is increased from 2 cents per
gallon. to 9 cents per gallon.

Certain alcohol fuels . — A new exemption of 9 cents per
gallon is provided for fuels consisting of at least 85
percent methanol, ethanol, or other alcohols derived from
sources other than petroleum or natural gas.

The Act also permits certain applicators to ground
farming processes (e.g., fertilizer) to claim the farming use
fuels tax exemption directly in the same manner as aerial
applicators of these processes are permitted to claim -the
exemptions under present law.

3 . Alcohol Fuels Income Tax Credit

The present law income tax credit for certain alcohol
fuels is increased from 40 cents per gallon to 50 cents per
gallon, effective from April 1, 1983, through December 31,
1992.

4. Tariff on Imported Alcohol Fuels

The present tariff on certain imported alcohol fuels is
increased to 50 cents per gallon, effective from April 1,
1983, through December 31, 1992.

5. Time for Payment of Gasoline Tax

The time for paying the gasoline tax is extended from 9
days after the end of the semimonthly payment period to 14
days after that period for independent refiners (as defined
in Code section 4995(b) (4)) and for all other taxpayers other
than refiners producing more than 1,000 barrels of crude oil
per day. To qualify for the additional time, the taxpayer
must make an election and must pay the tax by electronic wire
transfer. Additionally, in the case of payment days that
fall on a Saturday, Sunday, or legal holiday, the tax must be
paid on the preceding Friday (or Thursday, in the case of a
Friday holiday) .



-4-



B. Taxes on Trucks and Truck Parts



1 . Trucks • ■ '"

The Act converts the 10-percent manufacturers excise tax on
truck chassis and bodies, truck trailer and semitrailer chassis
and bodies, and highway tractors to a 12-percent retail tax on
those articles, effective April 1, 1983. A 2-percent retail tax
is provided for articles taxable under the retail tax and for
which the 10-percent manufacturers tax has been paid. A
12-percent retail tax also applies to the installation of parts
or accessories (excluding replacements) on a taxable article, if
it occurs within 6 months after the article was placed in service
and the aggregate value of the installed parts exceeds $200.

The gross vehicle weight below which articles are exempt "from
tax is raised from 10,000 pounds to 33,000 pounds in the case of
truck chassis and'bodies, and from 10,000 pounds to 26,000 pounds
in the case of truck trailer and semitrailer chassis and bodies.
In addition, rail trailers and vans (excluding piggy-back
trailers or semitrailers) which are designed for use both as a
highway vehicle and a railroad car are specifically exempt. The
increase in threshold weights and the exemption of rail trailers
and vans are effective the day after the date of enactment.

This tax will expire on October 1, 1988.

2. Truck parts

The Act repeals the 8-percent manufacturers excise tax on
truck parts and accessories, effective on the day after the date
of enactment. However, as described above, certain installations
of parts or accessories are taxable under the 12-percent retail
tax on trucks .



-5-



C. Heavy Vehicle Use Tax



The Act replaces the current tax rate of $3 per 1,000 pounds
of taxable gross weight with a tax rate that is graduated
according to taxable gross weight:

Taxable gross weight Rate of tax

At least: But less than:



33,000 pounds 55,000 pounds



55,000 pounds 80,000 pounds



80,000 pounds



$50 per year, plus $25
for e~ach 1,000 pounds
or fraction thereof in
excess of 33,0 00
pounds

$600 per year, plus the
applicable rate for
each. 1,000 pounds or
fraction thereof in
excess of 55,000
pounds

The maximum amount



The applicable rate and maximum amount are as follows:



Taxable period
July 1 of


beg


innj


.ng


on


Applica
rate


ble


Maximum
amount


1984


$40




$1,600


1985










$40




$1,600


1986










$44




$1,700


1987










$48




$1,800


1988 or tr


lere


after


• • • •


$52




$1,900



This schedule applies with a one-year delay in the case of a
person who owns and operates no more than 5 taxable vehicles
during a taxable period. The tax expires on October I, 1988, and
the amount of tax for the taxable period beginning on July I,
1988, is prorated accordingly, as one-fourth of the annual tax.

The Act raises the threshold level at which vehicles become



-6-



subject to tax from 26,000 pounds to 33,000 pounds of taxable
gross weight. A new exemption is provided for vehicles which are
used on the public highways for 5,000 miles or less during a
taxable period. A new credit or refund is allowed on a pro rata
basis, if a vehicle on which the tax has been paid is retired
from service during a taxable period because of accident or
theft. ; _.

The Act directs the Secretary of the Treasury (in
consultation with other parties) to study alternative forms of
the highway use tax and report findings and recommendations to
the tax-writing committees of Congress before January 2, 1985.
Beginning January 1, 1985, a State must require proof of payment
of the highway use tax before registering a vehicle in order to
qualify for its highway apportionment for the fiscal year.

These provisions are effective beginning on July l , 1984.



-7-

D. Taxes on Tires, Tread Rubber, and Inner Tubes

~1. Tires : ". "'"_.

The Act" replaces the present tax of 9.75 cents per pound
for highway tires made of rubber with a graduated tax at the
following rates and poundage brackets:

If the tire weighs The rate of tax is

Not more than 40 lbs. No tax.

More than 40 lbs. but 15 cents per lb. in
not more than 70 lbs. — excess of •?» lbs.

More than 70 lbs. but $4.50, plus 30 cents per
not more than 90 lbs. — lb. in excess of 70 lbs.

More than 90 lbs. $10.50, plus 50 cents

lb. in excess of
90 lbs.

These provisions are effective on January 1, 1984,
through September 30, 1988. The tax will expire on
October 1, 1988.

In addition, the Act repeals the tax of 4.875 cents per
pound on nonhighway tires and the tax on highway tires of one
cent per pound on laminated tires, effective on January 1,
1984.



2. Tread Rubber

The Act repeals the present tax of 5 cents per pound on
tread rubber used in recapping or retreading highway tires.
The provision is effective on January 1, 1984.

3 . Inner Tubes

The Act repeals the present tax of 10 cents per pound on
inner tubes for tires, effective on January 1, 1984.

E. Tax on Lubricating Oil

The Act repeals the present tax of 6 cents per gallon on
lubricating oil. The provision is effective on the day after
the date of enactment.



-8-



F. Floor Stocks Provisions

1. Floor Stocks Taxes

The Act imposes floor stocks taxes with respect to. those,
articles on which the rate of a manufacturers excise tax is
increased. The floor stocks taxes are equal to the. excess of â– 
the new tax rate over the prior rate and are imposed on the'-:.!,
date that the rate increase is effective.

Under the Act, articles subject to floor stocks taxes
include gasoline, tires over 40 pounds, and trucks and truck '
trailers over the increased taxable weight thresholds
provided by the Act.

2. Floor Stocks Refunds

The Act provides for floor stocks refunds with respect
to articles on which the rate of. a manufacturers excise tax
is repealed. The floor stocks refunds are equal to the tax
previously paid with respect to the article. The refunds are'
payable to manufacturers upon proof that dealers .(.or
consumers in the case of certain trucks and trailers) have
been reimbursed for the amount of the tax.

Under the Act, floor stocks refunds are provided with
respect to trucks and trailers below the new taxable weight
thresholds, highway tires weighing 40 pounds or less,
nonhighway tires, laminated tires, innertubes, tread rubber,
and truck and trailer parts and accessories , all from which
the Act removes the respective excise taxes.



-9-
Higfaway Trust Fund Provisions



1. Extension of the trust fund

„The Highway Trust Fund is extended for an additional 4 years,
from September 30 , 1984, through September 30> 1988. -To simplify
codification of tax law, the trust fund 'is transferred to the
Internal Revenue Code (as a new section 950 3) on January 1, 198 3,
and the present statutory provision for the trust fund in section
209 of the Highway Revenue Act 6f 1956 is repealed
simultaneously. For all purposes of law and any reference in any
law, the' Highway Trust Fund established in the Internal-Revenue
Code is to be treated as a continuation of this trust fund in : its
earlier statutory provisions.

2. Revenues appropriated to the trust fund

There are appropriated to the Highway Trust Fund amounts
equivalent to the taxes received* in the Treasury" under the
provisions relating to the highway" excise taxes described above.
Taxes received after the expiration date ;; bf the "trust fund and
before July 1, 1989, that are attributable 'to- liabilities
incurred before October 1, 1988, also are appropriated to the
trust fund. Amounts appropriated W the Airport and Airway Trust
Fund from the tax on aviation fuels are deducted ^beforehand ^from
the amounts deposited in the Highway Trust. Fund.

3 . Expenditures and transfers from the trust fund

Expenditures may be made before October 1, 1988, from the
trust fund, as provided by appropriation Acts, to meet
obligations incurred after authorization by law arid to be paid
out of the Highway Trust Fund established by section 209 of the
Highway Revenue Act of 1956, or authorized by law to be paid out
of the Highway Trust Fund (in sec. 9503 of the code) under title
I or II of the Surface Transportation Assistance Act of 1982.
Expenditures also may be made from the trust fund to meet
obligations that may be incurred after authorization by a law
which does not authorize the expenditure out of the Highway Trust
Fund of any amount for a general purpose not covered in the 1956
Act and the 1982 Act cited above, as in effect on December 31,
1982.

Expenditures from the Highway Trust Fund for highway purposes
may not be made from the Mass Transit Account, described in the
next section.

Transfers of funds may be made from the trust fund to the
general fund for amounts paid before July 1, 1989, for tax
credits, other payments attributable to non-highway uses of motor
fuels and lubricating oil, and for floor stock refunds on the
basis of claims filed for periods ending before October 1, 1988.



-10-



Motorboat fuels taxes up to S45 million will be transferred
annually to the National Recreational Boating Safety and
Facilities Improvement Fund through September 30, 1988. No
transfers may be made if the accumulated balance in the 3oating
Safety Fund is $45 million. Any other amounts of motorboat fuels
taxes will be transferred to the Land and Water Conservation
Fund.

4. Anti-deficit crovision ("Bvrd amendment")



Under the "Byrd amendment/' at least once in each- v calendar r
quarter, the Secretary of Treasury - after consultation with the
Secretary of Transportation - will estimate the unfunded highway
authorizations at the close of the next fiscal year and the net
receipts of the Highway Trust Fund for the 24-month period
beginning at the close of such fiscal year. In the event the"
unfunded authorizations will exceed the estimated receipts, the
Secretary of Transportation will reduce the apportionment to .the
States by the percentage of excess sauthori zat ion. If a ^ â– 
subsequent quarterly estimate indicates that the excess unfunded
authorizations are a smaller amount, or there is no excess, the
apportionments to the S t^tes will be adjusted accordingly,

- : ' ."■ " r. ; - .c " :;c ~-. - . ' ; : . „ ■-

The provision that authorizes repayable advances from the
general fund to the Highway Trust. Fund is repealed.

These provisions are effective on January 1, 1983.



-11-



H.- Mass Transit Account



A separate Mass Transit Account is established in the Highway
Trust Fund.. It consists of the revenue equivalent pf lucent a
gallon of the 9 cents a gallon excise taxes imposed on gasoline,
diesel and special motor fuels. These amounts ^ill be -1* V
transferred to the Mass Transit Account-with the , same tegular ity
and under the same conditions as amounts from these taxes ,ac ; a
transferred to the Highway Trust Fund. Interest earned as' a ;ar
.result -of investment in United States securities on the portion
of amounts in the Highway Trust Fund .that are. r attributable - : to ;the
Mass Transit Account will Jae credited to the Mass Transit
Account. '.szlzlb;- : as ■il::t-„ - n~ • ■■■

Amounts in the Mass Transit Account -are available, as -, c -
provided by appropriation Acts, for making capital expenditures
(including capital expenditures for new projects) ^before October
1, 1988, under section 21(a)(2) of the, Urban Mass Transportation
Act of 1964. Expenditures from the Mass Transit Account may be
made only for mass transit capital ^purposes , -and no expenditures
may be made from this account for highway purposes.

Unfunded authorizations are limited to the estimated net
receipts for the Mass Transit Account. The procedure is the same
as that specified for unfunded highway authorizations that may be
paid from the Highway Trust Fund, except that for the Mass
Transit Account, unfunded authorizations for any fiscal year may
not exceed 12 months of estimated net receipts.

The provision establishing the Mass Transit Account takes
effect on January 1, 1983.



II. REVENUE EFFECTS OF THE ACT

The revenue effects of the Highway Trust Fund tax provisions of
the Act are summarized in three tables.

Table X presents the estimated changes in Highway Trust Fund tax
revenues by major component compared to receipts under current tax
rates extended through 1988. Total Highway Trust Fund revenues are
projected to increase by $2.2 billion in fiscal year 1983,^4.9
billion in 1984, $5.2 billion during each of the next two years, and
$5.4 billion in each 1987 and 1988. The table also shows the net
revenue effects of the Act, which take into account the decreases in
income taxes resulting from higher excise taxes. The net revenue
effects on budget receipts are estimated at $1.7 billion in fiscal
year 1983, $3.7 billion in 1984, $3.9 billion in 1985, $4.0 billion in
each of the next three years.

Table 2 provides comparable data but the revenue changes have
been calculated from receipts that would have been collected under
rate reductions or expirations scheduled for 1984. Consequently, the
revenue gains shown in this table are substantially higher than those
in Table 2 for fiscal years beginning with 1985: $9.4 billion in
1985, $9.6 billion in 1986, $9 .9 billion in 1987-, and $.10.0 billion
19 8 8.



in



Table 3 shows total estimated Highway Trust Fund tax revenues
under the Act for fiscal years 1983-1988. Total Trust Fund tax -
revenues will increase from $6.7 billion actual in fiscal vear 1:982 to
? i e ?i;v?„ 11 ? fiscal year 1983, $1.1.7 billion in fiscal year 1984,
and $13.4 billion in fiscal year 1988.



-12-






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