A motor fuel tax is a kind of sales tax that is imposed on the sale of fuels such as gasoline, jet fuel, and diesel. Motor fuel tax rates are higher for fuel consumed for the purposes of transportation. Agricultural and heating fuels are taxed at a lower rate than motor fuels.
Generally, motor fuel tax rates are comparatively higher than the conventional sales taxes. Therefore, motor fuel tax is sometimes called excise taxes to distinguish between the two. Motor fuel tax rates vary from state to state.
The following is an example of a state statute (Alabama) defining the term:
Pursuant to Alabama Const. Amend. MOBILE Cty., Sec. 34, ‘Motor Fuel Tax’ means a privilege or license tax levied upon every person, firm, or corporation selling, delivering, or withdrawing from storage or keeping in storage for sale or delivery in the county, any gasoline, naphtha, or other liquid motor fuels, or any device or substitutes therefor, commonly used in internal combustion engines, including diesel oil, tractor fuel, gas oil, distillate or liquefied gas, kerosene, jet fuel, or any substitutes or devices therefor, when sold, distributed, stored, or withdrawn from storage in the corporate limits of the City of Mobile and the City of Prichard for use in the operation of any motor vehicle upon the highways, but not including "kerosene oil," "fuel oil," or "crude oil" commonly used for lighting, heating, or industrial purposes, in an amount equal to two cents ($.02) per gallon sold, delivered, withdrawn from storage, or kept in storage for sale or delivery. Provided, however, that the fuel tax herein provided for shall not be levied or paid on the sale of such motor fuels in interstate commerce, or to the federal government or any agency of the federal government, or to the State of Alabama, or to any incorporated municipality for municipal purposes, or to the county commission for county purposes, or to the board of school commissioners for the use or purposes of such board, or for use in operating or propelling tractors used exclusively for agricultural purposes, or for use in operating or propelling commercial fishing boats, or to such motor fuels which are withdrawn from storage for delivery only to a point or points outside the county, when the distributor or seller of such motor fuels prepares and files with the revenue commissioner of the county written statements sworn and subscribed to showing the name and address of the person and to whom such motor fuels are or have been delivered by the distributor or seller, the volume and kind of such motor fuels and the dates of such withdrawals, and the point or points outside the county to which the motor fuels are delivered, or are to be delivered. Where any excise tax which may be levied hereby upon the sale, use, distribution, storage, or withdrawal from storage of such motor fuels shall have been paid to the revenue commissioner of the county by any person, firm, or corporation, such payment shall be sufficient, the intent being that the tax shall be paid but once.