Update 1: IRS Lifts Taxes on Some Diesel Fuel
09.02.2005, 03:57 PM
The Internal Revenue Service acted Friday to expand the nationwide supply of diesel fuel by letting more vehicles use fuel intended for farm equipment and government vehicles.
The action allows commercial trucks and other vehicles to use special dyed diesel without paying a penalty excise tax. The dyed diesel fuel is used by farm, government and some off-road equipment, ordinarily not subject to federal excise taxes.
"Today's action is a relatively simple and straightforward step that will immediately increase the available supply of diesel fuel nationwide, which is especially needed in Gulf Coast relief efforts," said Treasury Secretary John Snow.
Treasury Department officials said the possibility of reducing the federal tax on gasoline is not under active consideration in the administration. They said it would require legislation to reduce the tax.
Gasoline in some parts of the country has risen above $3 a gallon, triggering thousands of consumer complaints of price gouging.
Treasury Department officials said it was possible that some members of Congress might push for a cut in the federal gasoline tax to help ease the pain of higher prices, but they would not say which lawmakers might be considering the idea.
State officials started to consider whether to suspend gas taxes in their states. Georgia Gov. Sonny Perdue said he will sign an executive order Friday to suspend state motor fuel taxes through the end of September to "relieve some of the financial burden" on consumers in the wake of Hurricane Katrina.
The order will remove the 7.5-cents-a-gallon tax and a 4 percent sales tax on gas, the governor said, and was set to begin at midnight.
Leaders in several other states, including Massachusetts, Connecticut and Pennsylvania, have either proposed or said they are considering gas tax suspensions in their states.
Federal officials are starting to think about whether they need legislation keep the economy moving as it recovers from the hurricane and surging gas prices.
"We also need to be looking at the long-term economic impact not just to the states affected, but to the economy of the entire region. And I suspect that means some kind of stimulus package out there to be sure that we see the economy move forward as it needs to rather than it might in response to this disaster," said House Majority Whip Roy Blunt, R-Mo.
