Fact Sheets on Highway Provisions

HIGHWAY TRUST FUND AND TAXES

Statutory References

SAFETEA-LU Section(s): Title XI; 4121

Other: 26 USC; 1362 of Energy Policy Act of 2005

Extension of Highway-User Taxes

Extends the imposition of highway-user taxes through September 30, 2011. These taxes consist of gallonage taxes on highway motor fuel and truck related taxes, including an annual tax on heavy vehicle use, a load rating-based tax on heavy truck tires and a retail sales tax on truck and trailer sales. The fuel taxes, with the exception of the 4.3 cents per gallon, the tire tax and the truck and trailer retail tax would have expired September 30, 2005. The heavy vehicle use tax would have expired September 30, 2006 having been extended in the Surface Transportation Extension Act of 2005. With the exception of certain alternative fuels (see below), the taxes are extended at the rates in effect prior to SAFETEA-LU enactment.

[11101(a)]

Extends provisions providing refunds and credits of fuel tax from the Highway Trust Fund. [11101(b)]

The imposition of the Leaking Underground Storage Tank Trust Fund tax is extended without rate change. [1362 of the Energy Policy Act of 2005].

Alternative Fuels [11113]

Effective October 1, 2006, excise tax rates for certain "alternative fuels" (previously referred to as special fuels in the Internal Revenue Code) are increased. Each of these fuels would be eligible for a credit per gallon for the alternative fuel, with the credit being paid from the General Fund. Excise tax rates would change as follows:

• Liquefied petroleum gas – increases from 13.6 cents per gallon to 18.3 cents per gallon
• Liquefied natural gas – increases from 11.9 cents per gallon to 24.3 cents per gallon
• Compressed natural gas – increases from 48.54 cents per thousand cubic feet to a rate that is energy equivalent to gasoline

Transfer of Taxes to the Highway Trust Fund

The deposit to the Highway Trust Fund of amounts equivalent to the proceeds of the highway-user taxes is extended through September 30, 2005. [11101(c)]

Generally, the Leaking Underground Storage Tank Trust Fund receives 0.1 cent per gallon of the fuel tax, the Mass Transit Account of the Highway Trust Fund receives 2.86 cents per gallon and the Highway Account of the Highway Trust Fund receives the remainder. All proceeds of the non-fuel taxes are deposited in the Highway Account. (See table below for details.)

The transfer of estimated motorboat gasoline taxes and taxes on small-engine fuel to the Sport Fish Restoration and Boating Trust Fund (SFRBT, formerly the Aquatic Resources Trust Fund) is extended. The Land and Water Conservation will continue to receive $1 million per year of motorboat gasoline receipts. Beginning October 1, 2005, no portion of the tax on motorboat gasoline will be retained by the General Fund. [11101(c)]

Civil penalties pursuant to 49 USC 31138(d)(5) and 31139(f)(5) related to minimum financial responsibility for transporting passengers and property, respectively, will be deposited in the Highway Account of the Highway Trust Fund instead of in the General Fund. [4121]

Expenditures from the Highway Trust Fund

Authority to make expenditures from the Highway Account of the Highway Trust Fund for authorized purposes is extended through September 29, 2009, except for expenditures for administrative expenses, which may take place through September 30, 2009. For the Mass Transit Account, expenditure authority is extended through September 30, 2009. After the specified dates, expenditures from the Trust Fund are authorized only to liquidate obligations made before that date. Any other expenditure will cause the cessation of deposits of highway-user taxes to the Trust Fund. [11101(d)]

Byrd Test

The Byrd Test is intended to ensure that the Highway Account and the Mass Transit Account of the Highway Trust Fund are each maintained as a self-financing entity. It provides fiscal discipline while still allowing recognition of the slow spending nature of these predominantly capital programs, but limits the number of years of estimated future receipts that can be counted on. SAFETEA-LU modifies the provision to count receipts for 4 years into the future, instead of the current 2 years. [11102]

Federal Highway User Taxes