Calculating the Oil Company Franchise Tax **NEW**
Background
State Law requires the Oil Company Franchise Tax (OCFT) to be calculated and certified annually by the state Department of Revenue.The rate is determined annually by the department and announced by each December 15 for the following calendar year. The tax rate is determined on a “cents per gallon equivalent basis,” which is defined in law.As of November 25, 2013, the law changed to eliminate the inflationary cap on the OCFT and the fixed 12¢ per gallon retail fuel tax.
Computing the Tax
To compute the “cents per gallon equivalent”, the average wholesale price per gallon is multiplied by the decimal equivalent of the millage rate imposed by the applicable state law.The product of this is rounded to the next highest tenth of a cent per gallon. The rate of tax is then determined and published in the Pennsylvania Bulletin no later than December 15 of the proceeding year by the Department of Revenue.The rate takes effect at the beginning of every January 1
The “Average wholesale price” used in the calculation is determined by average wholesale price per gallon of all taxable liquid fuels (gasoline) and fuels (diesel), excluding the federal excise tax and all liquid fuel taxes. As of January 1, 2014, the wholesale price is fixed in statute as follows:
- After Dec. 31, 2013, and before Jan. 1, 2015, the average wholesale price shall be $1.87 per gallon.
- After December 31, 2014 and before Jan. 1, 2017, the average wholesale price shall be $2.49 per gallon.
- After December 31, 2016, the average wholesale price shall be as determined by the Department of Revenue for the 12-month period ending on the Sept. 30 immediately prior to Jan. 1 of the year for which the rate is to be set.In no case shall the average wholesale price be less than $2.99 per gallon.
The calculation of the tax for the 2017 Calendar Year was calculated as follows:
A
|
Gasoline
|
Diesel
|
Notes | ||
| Sections of State Law specifying applicable tax millage rates | 75 Pa.C.S. 9502(a)(1) |
60.0
|
60.0
|
Not Subject to Discount (NSTD) |
| 75 Pa.C.S. 9502(a)(2) |
55.0
|
55.0
|
(NSTD) | |
|
75 Pa.C.S. 9502(a)(3) |
38.5
|
38.5
|
(NSTD) | |
|
75 Pa.C.S. 9502(a)(4) |
00.0
|
55.0
|
(NSTD) | |
| Total Mills per Gallon (NSTD): | 153.5 | 208.5 | ||
| Decimal Equivalent (NSTD): | .2175 | .2085 | ||
| Multiply by Average Wholesale Price | x$2.99 | x$2.99 | ||
| Product and Oil Company Franchise Tax per Gallon (Rounded Up to the Next Highest Tenth): | 45.9¢ | 62.4¢ | ||
| 75 Pa C.S. 9502(a)(5) | 41.0 | 41.0 | Offset for elimination of 12 cent retail tax | |
| Decimal Equivalent (STD):: |
.0410
|
.0410
|
||
| Multiply by Average Wholesale Price: |
x $2.99
|
x $2.99
|
||
| Product |
12.3¢
|
12.3¢
|
||
| Product and Oil Company Franchise Tax per Gallon (Rounded Up to the Next Highest Tenth): |
65.1¢
|
81.5¢
|
||
| TOTAL OCFT = NSTD + STD |
58.2¢
|
74.7¢
|
