Pennsylvania Petroleum Distribution Group Opposes Fuel Tax Amendment Approved by State House On BioDiesel Markerters - Huh?

HARRISBURG, Pa., Oct. 11 -- While Pennsylvania's businesses and consumers are struggling through the worst economic downturn in a generation, the Pennsylvania House of Representatives last week adopted an amendment that would impose a new, hidden fuel tax on businesses that sell -- and consumers who rely on -- biodiesel fuel.

John Kulik, executive vice president of the Pennsylvania Petroleum Marketers and Convenience Store Association (PPMCSA), said an amendment to SB 901 that was passed during a last-minute flurry of legislation debated before the House adjourned for its election recess imposes new burdens on small businesses and the customers they serve. The amendments would add another new fee, or tax, on companies that sell biodiesel fuel in Pennsylvania. Each convenience store, service station, truck stop or other retail location selling biodiesel would pay an additional $100 tax, on top of myriad other local, state and federal fees and taxes.

In addition, some member companies, especially from border counties, have expressed concern with an additional $5,000 "blender" fee contained in the proposal. This new fee would have a serious economic impact on their ability to import regular diesel and blend biodiesel from the states around Pennsylvania, none of which have a biodiesel mandate. This could have a major impact on distribution patterns, and ultimately the price of fuel in those areas.

"This tax, which is imposed on distributors and retailers who are required by the state to sell this kind of fuel, adds more costs to handling the fuel," said Kulik. "While some might argue that $100 does not seem like much, for businesses that have multiple locations the tax can accumulate to thousands or tens of thousands of dollars. It's a tax that they and their customers will be forced to pay."

The revenue from the tax purportedly is to be used for the state Department of Agriculture's enforcement of the state on-road biodiesel mandate that took effect May 1, 2010. This mandate requires that all on-road diesel fuel sold in Pennsylvania contain 2 percent biodiesel.

The tax increase is supported by the Rendell Administration to fund the Department of Agriculture program. In addition, during the floor debate on the bill, a trade group representing major oil companies was cited as being in favor of the amendment.

Kulik said that for the past year, PPMCSA has been pushing bipartisan legislation (SB 1282 and HB 2578) -- the PA Clean Heat Initiative -- which would streamline the petroleum distribution system, saving business and consumers millions of dollars due to greater efficiency and clean heating fuel.

"The House chose to ignore this far-reaching proposal, which would have balanced operating cost savings and enforcement costs, and passed the tax increase instead," Kulik said.

Kulik commended the House members who opposed this tax, especially Representative John Pallone (D-Westmoreland) and Rep Stan Saylor (R-York) who spoke in opposition to the amendment on the House floor.

"We're disappointed that such an important amendment was rammed through the House as the legislative session is winding down. Our association will oppose passage of Senate Bill 901 in its current form in the event the House takes up the measure on final passage," said Kulik.  

To learn more about the bipartisan PA Clean Heat Initiative, visit http://ppmcsa.org/pacleanheat/.