Request By:
Senator Michael R. Moloney
Chairman, Senate Appropriations
and Revenue Committee
Legislative Offices
Capitol Annex Building
Frankfort, Kentucky 40601
Opinion
Opinion By: Steven L. Beshear
You have requested an opinion whether Senate Bill 144, as enacted by the 1982 Session of the General Assembly, exempts motor carriers transporting natural resources under a permit authorized by the bill from the gasoline tax imposed under the provisions of KRS 138.220 or the special fuels tax imposed under the provisions of KRS 138.565.
Subsection (4) of Section 12 of Senate Bill 144 states in pertinent part as follows:
". . . Any motor carrier transporting natural resources under an approved resource recovery road hauling permit shall be exempt from the provisions of KRS 138.660."
It is our opinion that neither the above-quoted language nor any other provision of the bill exempts a motor carrier from the gasoline tax under KRS 138.220 or the special fuels tax under KRS 138.565. Clearly, the provisions of subsection (4) of Section 12 exempt a motor carrier from only those taxes imposed under KRS 138.660. Subsection (1) of KRS 138.660 imposes a use tax at the rate of nine percent (9%) of the average wholesale price on motor fuels used by motor carriers in operation on the public highways of Kentucky. In addition to the nine percent (9%) per gallon tax provided in subsection (1) of KRS 138.660, if a motor carrier operates equipment in this state having three or more axles, KRS 138.660(2) also provides that the carrier must pay a surtax of two percent (2%) of the average wholesale price on the amount of fuel used in operations on the highways of the Commonwealth. This combined eleven percent (11%) highway motor fuels use tax provided in KRS 138.660(1) and (2) is entirely separate and distinct from the gasoline tax levied under KRS 138.220 and the special fuels tax levied under KRS 138.565.
A corollary question is whether a motor carrier hauling natural resources in all his vehicles under a permit authorized by the bill is entitled to a credit under the provisions of KRS 138.695 for payment of the gasoline tax or the special fuels tax. My opinion is that a motor carrier hauling under a permit is not entitled to the credit. The credit provided in KRS 138.695 is allowed to ". . . [e]very licensee subject to the tax imposed by subsections (1) and (2) of KRS 138.660. . ." Under subsection (4) of Section 12 of Senate Bill 144, a motor carrier transporting natural resources under an approved permit is ". . . exempt from the provisions of KRS 138.660." Therefore, if the motor carrier is exempt from KRS 138.660, he cannot be a ". . . licensee subject to the tax imposed by subsections (1) and (2) of KRS 138.660" and thus is ineligible for the credit for payment of the gasoline tax or special fuels tax.
An additional question is whether a licensee subject to credit under KRS 138.695 is eligible for such credit upon all his vehicles, where some but not all are used in the transporting of natural resources under a permit authorized by Senate Bill 144. In this situation, it is our opinion that as to those vehicles transporting natural resources under a permit authorized by Senate Bill 144, the licenses is not subject to the tax levied under KRS 138.660(1) and (2) and thus is not eligible for the credit authorized against the tax.
Conversely, vehicles engaged in transporting other commodities remain subject to the tax levied under KRS 138.660 and are thus eligible for the credit authorized under KRS 138.695. While this is not made clear in the statutes, it appears to be the only equitable result. To allow credit for tax paid for natural resources vehicles would grant the taxpayer a windfall because there is no liability for the tax levied under KRS 138.660.
As you know, a court may take a different view of this matter, and the only way to be absolutely certain of the effect of Senate Bill 144, absent a court decision, is to legislatively clarify the language in the bill.