BILL ANALYSIS AND FISCAL IMPACT REPORT	Page 1 of  2

DATE: February 20, 2001	Submitted by: TAXATION AND REVENUE DEPT.       
	T. GLENN ELLINGTON, SECRETARY
BILL NUMBER:  HB-904

SPONSOR:  Representative Herrera

BILL SHORT TITLE:  Eliminate Tribal Distributors Tax Deduction

CONFLICTS, DUPLICATES, COMPANIONS:  HB-448, HB-497, SB-119, SB-407 (duplicate)

DESCRIPTION:  This bill eliminates the special gasoline tax deductions allowed to “registered Indian tribal distributors” and allowed for gasoline subject to tribal gasoline taxes.

EFFECTIVE DATE:  July 1, 2001

FISCAL IMPACT (Thousands of dollars)   Parenthesis ( ) indicate a revenue loss:

Estimated Impact on Revenues    	Recurring or		
			Nonrecurring	Funds	
	(FY 2001-2002)	(FY 2002-2003)	     Impact     	         Affected         	
Gross Receipts Tax	(2,700)	(2,950)	Recurring	State General Fund	
Gross Receipts Tax	(2,100)	(2,285)	Recurring	Local Governments	
					
Gasoline Tax	9,506	10,373	Recurring	State Road Fund	
Gasoline Tax	1,294	1,412	Recurring	Counties & Municipalities (Roads)	
Gasoline Tax	718	783	Recurring	County Government Road Funds	
Gasoline Tax	718	783	Recurring	Municipal Road Funds	
Gasoline Tax	180	196 	Recurring	Municipal Arterial Program	
Gasoline Tax	32	35	Recurring	State Aviation Fund	
Gasoline Tax	16	18	Recurring	Motorboat Fuel Fund	
					
PPL Fee	367 to 733 	400 to 800	Recurring	Corrective Action Fund	
PPL Fee	367	400	Recurring	Local Governments Road Fund	
					
TOTAL:	8,401 to 8,768	9,165 to 9,565	Recurring		

The gross receipts tax impact illustrates gross receipts tax due on 60 million gallons of gasoline which is not currently subject to the gasoline tax and is sold outside tribal boundaries.  A sales price of $1.50 per gallon was used for the illustration, and it was assumed the sales occur within municipal boundaries.

The gasoline tax impact illustrates imposition of the state gasoline tax on about 80 million gallons of gasoline sold by tribal distributors outside the Navajo Nation, Zuni Pueblo and the Jicarilla Apache Reservation.  Since Navajo, Zuni and Jicarilla lands align with or cross the state’s boundary, fuel could be imported directly onto the reservation and sold at retail within those reservation boundaries and not be subject to state gasoline tax.

While there are differences in the taxable event of the Petroleum Products Loading Fee (PPL Fee) and the Gasoline Tax, the amounts to be reported for purposes of the PPL Fee are the same as those reported under the Gasoline Tax.  The range in the fiscal impact on the Petroleum Products Loading Fee (PPL Fee) illustrates a tax rate of 1 cent per gallon and 1.5 cents per gallon, although other tax rates are possible.  The PPL Fee rate can be adjusted each year on October 1st based on balances in the Corrective Action Fund.

ADMINISTRATIVE IMPACT:  In the short-run a small adverse administrative impact on the department would result from changes to gasoline tax reporting forms.  The longer-run administrative impact on the department would probably be positive, eliminating the need to monitor the 30 million gallon limit per distributor per year of tax exempt gasoline, and eliminating the special qualifications for “registered Indian tribal distributors”.

OTHER IMPACTS AND ISSUES:

•	Laws 1999, Chapter 190 created the deduction for “registered Indian tribal distributors”.  The law allows up to 60 million gallons of gasoline per year on which state tax has not been paid to be sold outside tribal boundaries by two particular distributors.  The law also allows a deduction against state gasoline tax for gasoline sold at retail within tribal boundaries which is subject to a tribal gasoline tax (approximately 40 million gallons per year currently).

Laws 2000, Chapter 50 created a companion deduction for non-Indian entities selling gasoline within tribal boundaries which is subject to a tribal gasoline tax, to avoid the problem of double taxation.