HB-4571, As Passed House, December 5, 2013

SUBSTITUTE FOR

HOUSE BILL NO. 4571

A bill to amend 1945 PA 327, entitled

"Aeronautics code of the state of Michigan,"

by amending section 203 (MCL 259.203), as amended by 2008 PA 25.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 203. (1) There is hereby imposed a ~~privilege~~ tax at the

rate of ~~3 cents per gallon~~ 2% of the average wholesale price on ~~all~~

each gallon of aviation jet fuel, aviation gasoline, and fuel sold

or used in producing or generating power for propelling aircraft

using the aeronautical facilities on the lands and waters of this

state. The tax shall be collected and remitted in the same manner

and method and at the same time as prescribed by law for the

collection of the gasoline tax imposed on all gasoline used in

producing or generating power for propelling motor vehicles used

upon the public highways of this state under the motor fuel tax

act, 2000 PA 403, MCL 207.1001 to 207.1170. ~~A refund of 1-1/2 cents~~

~~per gallon shall be made to airline operators who show proof within~~

~~6 months after purchase that they are operating interstate on~~

~~scheduled operations.~~

(2) If a person required to register with the department of

treasury under section 94 of the motor fuel tax act, 2000 PA 403,

MCL 207.1094, is not registered, the person shall not ~~purchase~~ pay

tax under subsection (1) on aviation jet fuel, aviation gasoline,

or fuel ~~under this act at the rate imposed by subsection (1),~~ but

shall pay the applicable rate imposed on motor fuel by section 8 of

the motor fuel tax act, 2000 PA 403, MCL 207.1008.

(3) The tax otherwise imposed under subsection (1) is not

imposed on aviation fuel if the purchaser has certified in writing

to the seller that the aviation fuel is being purchased solely for

the purpose of formulating leaded racing fuel as that term is

defined in section 4 of the motor fuel tax act, 2000 PA 403, MCL

207.1004. Aviation fuel qualifying under this subsection shall be

identified on shipping papers and invoices as "aviation fuel exempt

for LRF".

(4) The tax rate per gallon on aviation jet fuel, aviation

gasoline, and fuel under subsection (1) shall be determined by the

department on a quarterly basis. Except as otherwise provided in

subsection (5), the rate shall be equal to the product of the

average wholesale price per gallon of aviation jet fuel, aviation

gasoline, or fuel and 2%, rounded up to the nearest 1/10 of 1 cent.

The tax rate determined under this subsection shall be in effect

for the 3-month period beginning on the first day of the month

following the month in which the rate is determined. For purposes

of determining the tax rate under this subsection, the average

wholesale price per gallon of fuel shall be the same as the average

wholesale price per gallon of aviation gasoline. The average

wholesale price adjustment for each quarterly period may not

increase or decrease by more than 1% of the average wholesale price

for the previous period. The department shall publish notice of the

rate determined under this subsection no later than the tenth day

of the month immediately preceding the month in which the rate is

effective. The department shall determine the wholesale price of

aviation jet fuel, aviation gasoline, and fuel based on available

wholesale or resale pricing data that best reflect or approximate

Michigan rack prices for these fuel types, as reported by the

United States energy information administration, the oil price

information service, or any other similar source for such pricing

data, whether publicly available or available only by subscription.

(5) The rate determined by the department under this section

shall not at any time be below 6 cents per gallon of aviation jet

fuel, aviation gasoline, or fuel.

(6) A determination by the department of the rate, wholesale

price, or average wholesale price under this section is presumed to

be correct and will not be set aside unless an administrative

tribunal or court of competent jurisdiction finds the department's

determination to be clearly erroneous.

(7) By January 1, 2014 and every 10 years after 2014, the

department shall complete a study to determine the cost of the

changes made to this section by the amendatory act that added this

subsection and shall forward a copy of the study to the members of

the senate and house committees that consider aviation fuel tax

legislation.

(8) As used in this section:

(a) "Aviation gasoline" means fuel that is designed for use in

the operation of aircraft other than jet or turbo-prop aircraft and

that is sold or used for that purpose.

(b) "Aviation jet fuel" means fuel that is designed for use in

the operation of jet or turbo-prop aircraft and that is sold or

used for that purpose.

price per gallon of aviation jet fuel, aviation gasoline, or fuel

as determined by the department based upon a 12-month rolling

average of the wholesale price. For purposes of this subdivision,

the 12-month rolling average period ends on the last day of the

month that is 3 months prior to the month in which the rate is

determined by the department under subsection (4).

(d) "Department" means the department of treasury.

(e) "Wholesale price" means the price per gallon of aviation

jet fuel, aviation gasoline, or fuel charged by a licensed supplier

to a purchaser at the time of removal from a terminal across the

rack, as determined by the department. Wholesale price does not

include the tax imposed by this act, federal excise tax imposed

under section 4081 of the internal revenue code, 26 USC 4081, any

other federal tax on fuel, or an environmental regulatory

protection fee imposed under section 21508 of the natural resources