Bill Text: NJ A3050 | 2014-2015 | Regular Session | Introduced
Bill Title: Provides sales and use tax exemption for compressed natural gas used to fuel certain bus operation.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2014-03-24 - Introduced, Referred to Assembly Environment and Solid Waste Committee [A3050 Detail]
Download: New_Jersey-2014-A3050-Introduced.html
Sponsored by:
Assemblyman VINCENT MAZZEO
District 2 (Atlantic)
Assemblyman UPENDRA J. CHIVUKULA
District 17 (Middlesex and Somerset)
SYNOPSIS
Provides sales and use tax exemption for compressed natural gas used to fuel certain bus operation.
CURRENT VERSION OF TEXT
As introduced.
An Act providing an exemption under the sales and use tax for compressed natural gas used to fuel certain bus operation, supplementing P.L.1966, c.30 (C.54:32B-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Receipts from sales of compressed natural gas used to operate autobuses while being operated over the highways of this State in those municipalities to which the operator has paid a monthly franchise tax for the use of the streets therein under the provisions of R.S.48:16-25 and autobuses while being operated over the highways of this State in a regular route bus operation as defined in R.S.48:4-1 and under operating authority conferred pursuant to R.S.48:4-3, or while providing bus service under a contract with the New Jersey Transit Corporation or under a contract with a county for special or rural transportation bus service subject to the jurisdiction of the New Jersey Transit Corporation pursuant to P.L.1979, c.150 (C.27:25-1 et seq.), and autobuses providing commuter bus service which receive or discharge passengers in New Jersey are exempt from the tax imposed under the "Sales and Use Tax Act," P.L.1966, c.30 (C.54:32B-1 et seq.).
For the purpose of this section "commuter bus service" means regularly scheduled passenger service provided by motor vehicles whether within or across the geographical boundaries of New Jersey and utilized by passengers using reduced fare, multiple ride or commutation tickets and shall not include charter bus operations for the transportation of enrolled children and adults referred to in subsection c. of R.S.48:4-1 and "regular route service" does not mean a regular route in the nature of special bus operation or a casino bus operation.
2. This act shall take effect immediately and apply to receipts from sales of motor fuel made on or after the first day of the second month next following the date of enactment.
STATEMENT
This bill provides a sales tax exemption for compressed natural gas used for the operation of certain public buses.
The "Motor Fuel Tax Act," P.L.2010, c.22, completely revised the taxation of fuels in New Jersey, replacing an outdated tax system that dated in part back to 1935. That law changed the point of taxation of motor fuel from the retail level to the level at which it is removed from the bulk fuel storage and distribution system (refineries, pipelines, ships and barges) at a terminal. Compressed natural gas (CNG), which is not distributed through that system, ceased to be taxable as a motor fuel. However, that change seems to have had an unintended consequence for public transportation system use of CNG.
Fuel that is taxable as motor fuel that is used in operating buses on regular bus routes was, and still is, exempt from motor fuel tax (actually, tax is paid on the fuel purchase and then rebated to the purchaser on proof of the exempt use). Fuel taxable as motor fuel was, and still is, exempt from sales tax. However, when CNG ceased to be taxable as motor fuel, its use in buses began to be taxed under the sales tax. The effective tax rate on the fuel used in CNG powered public buses went from zero to seven percent of its sales price.
Natural gas is a clean-burning fuel. Compared with vehicles fueled by conventional diesel and gasoline, natural gas vehicles can produce significantly lower amounts of harmful emissions such as nitrogen oxides, particulate matter, and toxic and carcinogenic pollutants. Because CNG is an efficient fuel, natural gas vehicles also produce less carbon dioxide per mile traveled than diesel or gasoline powered vehicles (CNG use also results in less wear on the parts of an engine than gasoline).
Natural gas is a safe fuel. Because natural gas is lighter than air, in crashes natural gas tends to disperse quickly into the air and is less likely to cause fires than refined petroleum fuels.
The federal Environmental Protection Agency (EPA) points out that use of natural gas promotes energy security. Most petroleum is imported and most of that is refined to motor fuels, leaving the country vulnerable to supply disruptions. Because most of the natural gas consumed in the United States is produced domestically or by what the EPA refers to as "politically stable countries," and an extensive natural gas infrastructure exists, using natural gas vehicles reduces United States dependence on foreign oil.
To restore to public transportation providers the tax exemption on their fuel they had before motor fuel tax reform, and to encourage further use of natural gas, this bill provides a sales tax exemption for CNG used to fuel route buses and commuter buses that is the same as the exemption currently in effect for diesel and gasoline-powered buses under the Motor Fuels Tax Act.
