Tax exemption for natural gas vehicle conversion.

13LSO-0297.L3

FISCAL NOTE

The fiscal impact, in the form of decreased sales and use tax revenues, is indeterminable.

The Department of Revenue assumes that this exemption would apply to equipment to make vehicles able to operate in whole or in part on compressed natural gas (CNG). The revenue decrease from sales of conversion equipment would be dependent on the number of vehicles and the type of vehicles converted. Information provided by the Department of Administration and Information stated that the cost to convert various vehicles to CNG would range anywhere from $8,000 to $15,000 per vehicle.  Information from Chesapeake Energy was slightly lower but in the same range.  Sales taxes exempted on these conversions would range from $430 to $807 per vehicle for every conversion, based on an average sales tax rate of 5.38 percent.  The number of vehicles converted cannot be determined, but would likely be a function of the availability of CNG in the state.  As the fuel becomes more accessible, more people will likely convert as long as the cost of ownership is offset by cheaper fuel.

This exemption is repealed effective June 30, 2017.

Prepared by:   Dean Temte, LSO  Phone: 777-7881

(Information provided by Dan Noble, Dept. of Revenue; 777-5220:

Joyce Hefenieder, Dept. of A&I; 777-3335)