STATE LEGISLATIVE UPDATE: IOWA JOINS STATES ADJUSTING CNG AND LNG TAX

This past week, Iowa joined the growing list of states that now assess excise taxes on CNG and LNG by adjusting the tax for energy content and also use units favored by the natural gas industry. SB 2338 adjusts the tax on CNG so that it is imposed per GGE (5.66 lbs. or alternatively 126.67 cu. Ft). With this change, the rate imposed on CNG will go from 16 cents per 100 cubic feet to 21 cents per GGE. The new law retains the current 22.5 cent rate for LNG but imposes it on a DGE of 6.06 lbs. instead of per gallon. The new excise tax treatment takes effect July 1, 2014. So far this year, New Mexico, South Dakota and Wyoming also have enacted legislation adjusting their motor fuel taxes so that natural gas receives more equitable treatment when taxed. Bills pending in thirteen other states look to make similar changes to the way natural gas is taxed.