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Office of Program Policy Analysis and Government Accountability

Review of Florida Diesel Fuel Taxation , Report No. 94-19, December 1994

  • Florida's truck service facilities appear to have a retail price disadvantage in relation to truck service facilities in neighboring states because Florida diesel fuel prices are higher. This price difference is largely caused by Florida's higher taxes on diesel fuel; Florida's taxes are up to twice as high as those of our neighboring states. However, this apparent competitive disadvantage is ameliorated by several factors. First, carriers must pay taxes based on usage of a state's highways; thus, carriers operating in Florida must pay the state's higher fuel taxes regardless of where they buy their fuel. Second, Florida will refund the majority of its fuel taxes to carriers who buy fuel in Florida but then use it to drive in other states. Finally, Florida's taxation system is more industry-friendly than those of other states, as Florida has simplified the tax payment process and provides timely refunds to carriers. These effects largely negate the apparent price disadvantage of Florida truck service facilities; however, carriers reportedly are not always aware of this outcome. Increased efforts to educate carriers about states' varying tax administration and the actual taxes they ultimately will pay may be the most effective method of resolving the apparent competitive disadvantage created by Florida's fuel tax.

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