Pennsylvania Governor Reverses State Tax Increase on LNG Fuel

On Thursday, Pennsylvania Acting Secretary of Revenue Eileen McNulty announced that Governor Wolf has reversed a decision made in late 2014 that increased state tax on LNG, after thorough consideration of the environmental and economic development benefits derived from use of LNG as an alternative to diesel. “One of my goals is to promote and develop a comprehensive energy portfolio for Pennsylvania that supports clean energy alternatives to imported petroleum,” said Wolf. “Liquefied natural gas is not only a cleaner alternative to diesel, generating lower pollutant emissions when used to fuel vehicles, but it’s also produced here in Pennsylvania from abundant natural gas reserves.” Many in the NGV community will cheer the decision since the December decision to change the way LNG had been taxed took many by surprise and was done without notice or opportunity to comment.

For 2015, a gallon of gasoline is subject to state tax of 50.5 cents, while diesel is taxed at 64.2 cents per gallon. LNG is defined in Pennsylvania law as an alternative fuel that should be taxed based on its energy potential as compared to gasoline. The Department of Revenue up until December had taxed LNG using a cents-per-gallon basis indexed to gasoline. The policy shift late last year effectively increased the state tax on LNG by 4.3 cents per gallon, according to the DOR announcement. The reversal of the tax change for LNG is effective retroactively to January 1, 2015. As required by law, the new rate of 33.5 cents per LNG gallon will be reflected in the March 13 edition of the Pennsylvania Bulletin.