4-21-16 – Alternatives to Raising the Fuel Gross Receipts Tax

by Matt Cota
The Vermont Fuel Dealers Association does not support an increase in the Fuel Gross Receipts Tax. While low oilheat and propane prices have resulted in less revenue for the Weatherization Trust Fund, there are a basket of solutions that can backfill the funding shortfall. Some of these solutions have already been added to H.873 as approved by the House. For instance, the Weatherization Trust Fund will receive $900,000 in FY17 by requiring energy companies to pay Fuel Gross Receipts tax faster by filing the FG-601 tax form on a monthly rather than quarterly basis. The measure also eliminates the ability for fuel companies to ask for a rebate on the Fuel Gross Receipts Tax. Based on refunds of the GRT received in 2015, this would add an additional $92,383 for low income Weatherization Trust Fund.
Unused fuel assistance money is also available. The same reasons for the loss in GRT revenue has resulted in an excess of fuel assistance funds. Thanks to the warm winter and low oilheat prices, the state has only distributed $14.8 million, about 78% of the $18.9 allocated by the federal government for FY 16. Federal LIHEAP rules allow 15% of the state block grant to be used for low income weatherization. Vermont is not among the 44 states that use federal LIHEAP grants for weatherization. This represents up to $2.8 million in FY16 and $2.6 million in FY17 based on Vermont’s federal LIHEAP grant allocation.
In addition, since the Office of Fuel Assistance does not have a process for reducing benefits to recipients that have had their home weatherized or reduced consumption through other methods, the state continues to overpay some fuel assistance recipients. If the “Plan to Advance Coordination of Fuel Assistance with Weatherization” as proposed in 2015 was implemented, it would provide an additional $200,000 a year to the Weatherization Trust Fund.  Since this coordination is not in place, heating fuel dealers will return fuel assistance funds that were not used by low income Vermonters to the state on May 31, 2016. Given the warm winter and low prices, this could amount to more than $500,000. Furthermore, there are other opportunities to reduce the administrative cost of LIHEAP and weatherization. As disclosed in House Appropriations Committee and the House Committee on Human Services this year, 18% of fuel assistance money is spent on administration.
What would a tax increase cost?  At $2.65 a gallon, 3/4% fuel gross receipts tax would amount to 2-cents per gallon. At $4 a gallon 3/4% fuel gross receipts tax would amount to 3-cents per gallon. Keep in mind, the tax applies to all consumers. It is paid by residential heating customers, businesses, farms, schools, churches, and towns. It is applied to every sale of dyed diesel used to power construction equipment, generators, tractors, school buses, and plow trucks. There are no manufacturing, municipal, or non-profit exemptions.

Matt Cota is executive director for the Vermont Fuel Dealers Association. This piece was first presented as testimony to legislators in the State House.

{ 1 comment… read it below or add one }

jim bulmer April 23, 2016 at 12:46 pm

The lack of a procedure to reduce assistance once a state funded weatherization project has been completed is just one more examle of the level of incompetence of the super majority in Montpelier. In their rush to help, they did not think to end a subsidy after the recipient no longer qualified. No big deal, it’s only OUR money and just a minor tax.


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