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Committee hears DMV on diesel refunds, dyed diesel and potential tax leakage
Summary
DMV staff described how on-road diesel taxes are collected at the rack, how diesel refunds for non-propulsion uses work, and cited gaps around sales-tax reporting and dyed diesel use that may be losing revenue to the transportation fund; staff said they are pursuing an MOU with the Department of Taxes and launching an internal audit program.
Renee Foto and compliance staff told the House Transportation Committee on April 16 that Vermont collects motor-fuel taxes at the wholesale rack and that the DMV is working to close compliance gaps around diesel refunds and the use of dyed diesel for on-road propulsion.
Foto summarized the motor-fuel tax rates in current use: gasoline is taxed at 32.61 cents per gallon, clear on-road diesel at 32 cents per gallon; she also described additional components including a petroleum distributor licensing fee (1 cent per gallon) and an additional motor-fuel transportation assessment (MFTIA) of 6.1 cents per gallon and an MFTAF component that is calculated at 4% of the state average retail price and collected as about 13.4 cents per gallon in the current…
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