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FHWA Attribution of Federal Highway Trust Fund Tax Receipts

FHWA Attribution of Federal Highway Trust Fund Tax Receipts. IFTA Annual Business Meeting New Orleans, Louisiana July 18-19, 2008. The Big Picture. What’s important about motor fuel data, attribution, and the apportionment process? The amounts of funding involved

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FHWA Attribution of Federal Highway Trust Fund Tax Receipts

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  1. FHWA Attribution of Federal Highway Trust Fund Tax Receipts IFTA Annual Business Meeting New Orleans, Louisiana July 18-19, 2008

  2. The Big Picture • What’s important about motor fuel data, attribution, and the apportionment process? • The amounts of funding involved • The distribution of those funds, or Your State’s Share

  3. Introduction I • FHWA estimates how much federal highway tax money comes from each State • Compared to how much each State receives from FHWA • Derives a “for every dollar in, how much does my State receive” or Donor-Donee ratio • This is extremely important: • To Congress, FHWA, and the States • That the data be correct

  4. Introduction II • The methodologies are reasonable • The data is less than perfect • Different motor fuel laws in each State • Tax Systems designed for • Revenue collection • Not data collection • State agency interest levels • Tax evasion • Imperfect reporting on form FHWA-551M

  5. Federal Highway Taxes • Fuel Tax (cents per gallon): • Gasoline 18.4 • Diesel 24.4 • Retail Excise Tax – 12% for 33,000 lbs. Tractors or 26,000 lbs. Trailers • Tire Tax – 9.45 cents per 10 lbs. over 3,500 max. rated load capacity • Use Tax – trucks over 55,000 lbs. sliding scale up to $550

  6. Highway Accounts • Highway Trust Fund Accounts • Mass Transit Account • Receives 2.86 cents for every gallon of fuel • Receives none of the “truck” taxes • Highway Account • The rest of this presentation will cover only the Highway Account

  7. Federal Highway Account Taxes 2007 • Gasoline - $20.6 billion • Diesel - $8.9 billion • Retail - $3.8 billion • Use – $1.0 billion • Tires - $.4 billion • Total – $34.8 billion

  8. Federal-aid Funds • Apportioned funds: • Formula based • Formulas determined by Congress • $34.7 Billion in 2007 • Allocated funds • Everything else • $6.1 billion in 2007 • Spending more than we collect • Fund balance is falling

  9. Apportionments • Under SAFETEA-LU, more than $14.9 billion is annually apportioned based on motor fuel data • That’s about 37% of 2007 Federal Highway Programs

  10. Apportionment and Motor Fuel Data

  11. The Attribution Process • FHWA attribution supports the apportionment process • How FHWA calculates attribution • The role of State data

  12. How Attribution Works I • State-by-State contributions to the Federal Highway Trust Fund were not available from the Internal Revenue Service (IRS) • With EXSTARS, that data is coming on-line

  13. How Attribution Works II • Typical federal motor fuel taxpayer is an oil company or oil wholesaler • 8,000 are licensed with IRS • Federal tax is imposed as the fuel crosses the rack • Bulk shipments • Terminals • Truck shipments • IRS reports total tax receipts (after refunds and transfers) for each motor fuel tax type

  14. How Attribution Works III • HTF contributions from highway users in each State are estimated using State motor fuel data • States report the motor fuel taxed under each State’s procedures • FHWA uses established methodologies to derive a consistent, compatible dataset for attribution

  15. FHWA Estimation of Non-Highway Gasoline • Estimate off-highway uses of: • Agriculture • Construction • Industrial and commercial • Small boat • Aviation gasoline • Compare to State-reported amounts • Use one or the other

  16. How Attribution Works IV • From adjusted State motor fuel data • Measure on-highway gallons of motor fuel (Gasoline - Special fuels) • Sum to derive the national total (by type) • Derive each State’s share of the national total • Use those shares (based on gallons) to determine revenue shares

  17. How Attribution Works V • For the federal truck taxes: • Tire tax • Truck and trailer retail sales excise tax • Heavy vehicle use tax • Attributed to each State in proportion to the highway use of special fuels

  18. For Math Lovers Only SS i,k = SG i,j x TR k ( S SG i ) j SS = State share of Federal motor fuel receipts SG = State gallons of motor fuel TR = Net Federal Treasury motor fuel tax revenue i = State, 1 through 51 (D.C. counts as a State) j = Fuel type: gasoline, special fuels k= US Treasury revenue by highway tax type

  19. Attribution Timing • States report monthly tax data • Monthly Motor Fuel Reported by States • A calendar year’s worth of data is analyzed by FHWA the following summer • Non-highway estimates are applied • Selected tables in Highway Statistics • States make adjustments and corrections in over another year • Modified tables in Verification Memo • Calendar year fuel data is applied to Fiscal year IRS revenue data • Selected tables in Highway Statistics

  20. Attribution and Data Quality • FHWA’s goal is an accurate data-set for attribution • FHWA performs actions aimed at improving accuracy of State reporting

  21. FHWA Reviews • Motor Fuel Reviews • Review State reporting procedures • Risk assessment • State visits by FHWA HQ staff • Typically, 3 per year • Improves communication

  22. IFTA Data • Carriers subject to IFTA are a significant portion of diesel fuel use • FHWA interest: gallons consumed in each State • Additional calculations are necessary to derive this number correctly • “Transmittals” are the key documents • “Net Taxable Fuel” is the key element

  23. In Concept • Include the net taxable gallons consumed in your State by your IFTA carriers • Include net taxable gallons consumed in your State but reported by another jurisdiction

  24. In Current Practice • Each State’s Transmittal report must be examined • Three surcharge States • Indiana • Kentucky • Virginia • Net taxable gallons are now reported such that they can be used for FHWA purposes • Manual adjustments must be made with the ten jurisdictions not in the IFTA Clearinghouse.

  25. In Current Practice - II • Inconsistent numbering of the “Transmittal Period” column • Resolved when the IFTA Clearinghouse implements funds netting • Inconsistent treatment in reporting audits • Some show net taxable gallons • Others enter only dollars (which require additional calculation)

  26. The Future • By the next annual business meeting, we hope most of these issues will be resolved • Probably the biggest hurdle is communicating to the un-initiated in your State how to handle IFTA data for FHWA reporting purposes

  27. Summary • Apportionment • Funding distribution • Formula based • Attribution • Why FHWA does attribution • How FHWA performs attribution

  28. Summary - II • IFTA data as significant to FHWA • FHWA’s use of IFTA data • Current practice • The future

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