Senate Bill Introduced to Change How LNG is Taxed

U.S. Senators Michael Bennett (D-Colo.) and Richard Burr (R-N.C.) have introduced legislation that would require that liquefied natural gas (LNG) for transportation fuel be taxed based on energy output and not by the gallon equivalent. The LNG Excise Tax Equalization Act of 2013 (S.1103) looks to establish equitable taxation of LNG as a transportation fuel.  The measure echos a similar move by Representatives Mac Thornberry (R-Texas) and John Larson (D-Conn.), who recently introduced The LNG Excise Tax Equalization Act of 2013 (H.R. 2202) in the House. Currently, the federal highway excise tax on both diesel and LNG is set at 24.3 cents per gallon. However, it takes about 1.7 gallons of LNG to equal the energy content of one gallon of diesel. The result is the taxation of LNG at a rate 70 percent higher than diesel on an energy equivalent basis. The federal government already equalizes the tax between compressed natural gas and gasoline.


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