Originally Posted by allan5oh
My spelling is pretty good, but grammar has always been weak. Seems as though every time I moved, grammar was coming up at my old school and already passed at the new one. The joys of public school. Anyways, I'm under a tight deadline. Editor moved up my first article from January to..... monday! What a leap!
I've chosen to talk about IFTA and how to buy fuel. It is for the company quarterly newsletter. I would really appreciate any tips, comments, grammar error fixes, etc...
Here it is:
Welcome to the inaugural column brought to you by Allan Simonson, unit 400 of Payne Transportation. The purpose of this column is to expand profit and share ideas. In this edition I'm going to attempt to explain how fuel tax works, and why you should only be concerned about the base price of fuel.
How does fuel tax work?
Every time you purchase fuel, fuel tax will be paid. This money is banked on your behalf in your IFTA account. At the end of the quarter/month, your company will calculate how many gallons burnt in each jurisdiction, and will calculate how much is owed to each out of the IFTA account. If the total amount you owe is greater than how much you've paid throughout the quarter, additional IFTA tax will be owed. If the opposite is true a refund will be issued. Whether you get a bill or a refund doesn't actually matter, the total bill is the same.
That's why how much fuel tax you pay at the pump doesn't matter. Buying fuel at truck stop A or truck stop B in different states doesn't change your total fuel tax bill, only shifts it from paying now or paying later.
How does this affect fuel purchasing?
This has a unique effect on fuel purchases. Think of your fuel purchases as two distinct units, one you're paying for the fuel, the other is simply being banked away in your IFTA account. This means you want to pay the least for the first part of the fuel price(the base price), since the second price doesn't matter. That is why we need to deduct the fuel tax when comparing prices.
If you've passed through Illinois to get fuel in Indiana, you've made a very common mistake in our industry. Fuel is far cheaper in Illinois even though the pump price suggests otherwise.
Payne Transportation supplies maps with fuel tax rates on them, updated quarterly. Use these maps to deduct the fuel tax from the pump price as follows:
Pump price - State fuel tax rate = Base price
In the next issue, I will address cross border fuel price calculations, how to lower your total fuel tax bill(there are only two ways, increased fuel mileage or changing your routing), among other things. Any tips/comments/flames/ideas drop me a line at (email address removed).
This is great! I have no earthly idea what you are talking about, but it sounds GREAT!
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