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OCR for page 64
64
International Border taxation in the distribution system affects administrative
costs because the number of taxpayers decreases as the point
International borders also create opportunities to evade
of taxation is moved up the distribution system.
through cross-border evasion schemes, thus requiring
expanded enforcement and higher administrative costs. To
satisfy this criterion, the state must border Canada or Mex- Motor-Fuel Tracking System
ico. Of those states selected for analysis, three (California,
In recent years, states have built motor-fuel tracking sys-
Texas, and Idaho) meet this criterion.
tems to track shipments of fuel between fuel suppliers. These
automated tracking systems enable motor fuel tax enforce-
DOT Reported Administrative Costs ment authorities to detect discrepancies between reported and
The U.S. DOT's Comparing Administrative Costs of Collect- actual transactions between fuel suppliers. While these sys-
ing Highway Revenues: Fuel Tax vs. Direct User Charge and its tems reduce evasion, there is a cost associated with their use.
analysis of motor fuel tax administrative costs to target high, Further, their use is indicative of enhanced enforcement mea-
mid-level, and low operating cost states is used as a reference sures, which could generate additional costs while still yield-
(HDR, 2009). While the results of the surveys conducted in ing positive returns on investment through reduced evasion.
this study could differ from the findings of this U.S. DOT Of the 15 states with automated motor-fuel tracking systems
report, the findings of that report are considered an indica- identified in NCHRP Report 623: Identifying and Quantifying
tor of operating cost levels with each state. In the U.S. DOT Rates of State Motor Fuel Tax Evasion, three (California, Col-
report, average motor fuel tax administrative costs were esti- orado, and Tennessee) were identified for further analysis
mated at 1.0% of total tax collections. Of the eight states (Weimar et al., 2008).
selected for further analysis, two registered average operating
cost levels (New Jersey and Texas), three were below average State Population
(California, Colorado, and Iowa), and three were relatively
high operating cost states (Idaho, Florida, and Tennessee). The selected states vary significantly based on population.
The sample of states includes two rural, low-population states
(Idaho and Iowa) and three high-population states (California,
Geographic Dispersion
Texas, and Florida). The remaining states' populations range
States were selected to capture multiple regions and achieve from 4.9 million (Colorado) to 8.7 million (New Jersey).
geographic dispersion. As shown in Figure 36, states were tar-
geted in the Northeast, South, Midwest, Southwest, Moun-
4.2.3 Identification of Responsible
tain, and West Coast.
Agencies Within Sample States
Agencies and organizations within each of the sample states
Point of Taxation
that are responsible for collecting, administering, and enforc-
States with points of taxation at the terminal, distributor, ing motor fuel tax programs vary from state to state. The
first receipt/sale, and retail levels were identified. The point of agencies investigated for this analysis include
Figure 36. States targeted for detailed administrative cost
analysis.
