Louisiana Loophole

Blanco supports gas tax at the rack

Published in CSP Daily News

BATON ROUGE, La. -- Louisiana Governor Kathleen Blanco is backing a bill that would change the collection point on gasoline taxes to the refinery, reported the Baton Rouge Advocate.

Known as tax at the rack, House Bill 599 would centralize the collection to make it harder to cheat the state, said the report. At least 19 other states already collect gasoline tax at the refinery that makes the fuel, it added.

Texas estimated it lost up to $75 million a year when distributors paid the tax. The federal government's collections rose 30% [image-nocss] after making the switch to a tax at the rack.

The bill would force distributors to pay the tax to the refinery, which would then remit the revenue to the state, said Ellen Rhorer, assistant to the secretary of the state Department of Revenue. Any added cash would go into building and maintaining roads, said Andy Kopplin, the governor's chief of staff. This increases the amount available in the transportation trust fund for road building, he told the newspaper.

Cinde Fontenot, an audit supervisor with the state Department of Revenue, said it is difficult to flush out fraud when distributors pay the tax because of the sheer number of distributors. They buy the gasoline from the refinery and avoid paying the state tax by claiming they are taking it to Texas when they are actually selling it in Louisiana, she claimed.

Moving the collection point means 50 to 60 people will be remitting the tax compared to 700 to 800 distributors, Fontenot said. To move the collection farther up minimizes the number of hands that touch the [tax], she told paper.

Blaise Carriere, assistant to the secretary for policy at the state Department of Transportation & Development, said a small number of dishonest distributors are costing the state a lot of money. All the good people are doing the right thing, he told the Advocate. A few people who are not playing by the rules are evading the tax.

Based on the experience of other states, Louisiana stands to gain up to $25 million a year by changing the collection point, he said.

The Louisiana Oil Marketers & Convenience Stores Association (LOMCSA) is working with the state Department of Revenue to resolve issues with the legislation, the report said. The meetings likely will result in amendments to the bill, officials said.

Natalie Babin, executive director of LOMCSA, said the organization supports the concept of moving the tax to the rack, with a bit of tweaking. Rhorer said the tweaking is technical, such as when the refineries will remit the tax.

Carriere characterized the legislation as a good guy bill. The only losers are the people who are cheating, he said.

(See related story in this issue of CSP Daily News for more on gasoline prices in Louisiana.)