State Government and Legislation and Energy & Environment and Government & Economic Development and Government

Proposal would cut sales tax for propane users

January 28, 2014

Indiana senators will act to provide relief to Hoosiers hurt by a Midwest shortage of propane that’s boosted prices to higher than normal levels.

Republicans say they will offer an amendment to Senate Bill 1 to eliminate the sales tax on any propane that costs more than $2.50 per gallon. Some customers are paying as much as $5 per gallon.

Sens. John Waterman, R-Shelburn; Doug Eckerty, R-Yorktown; and Jim Smith, R-Charlestown, proposed the amendment.

“Folks are paying high prices and struggling even to find propane at all,” Waterman said.  “Our plan will exempt the sales tax from any charge above $2.50 per gallon on propane.”

The demand in propane has affected Hoosiers, Waterman explained, especially in rural areas where it is a primary source of fuel for heating.

Sen. Brandt Hershman, R-Buck Creek, author of SB 1, said he supports the amendment.

“I believe the amendment offered today will ease many of the concerns that propane consumers and lawmakers have voiced,” Hershman said.

Eckerty said he does not expect the amendment to reduce state revenue because prices were not expected to be this high.

“We were only collecting on $2.50 per gallon anyway so the big run up in price is not something we anticipate,” Eckerty said.

The exemption will extend to March. Waterman said that if the plan becomes law, people will see a credit on their next propane bill for the amount of their exemption.

“Gov. (Mike) Pence and federal officials have taken emergency steps to get more propane to the Hoosiers,” Waterman said. “This sales tax exemption is a small step legislators can take to help the situation.”

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