Maine Taxes Bulk Motor Oil


Maine recently repealed a motor vehicle oil change fee put in place last October, amending the law to replace it with a fee imposed on distributors of bulk motor oil. The collected fees will still go to help pay for clean up of four former waste-oil sites.

Retailers providing oil change services and fleet owners conducting their own oil changes are no longer required to collect and/or report the $1, $2 and $3 oil change premiums on or after Aug. 1, 2008. The state will impose a new fee effective Aug. 1, 2008, of $1.10 per gallon for gasoline engine bulk motor oils and 35 cents per gallon for diesel engine bulk motor oils sold or distributed in Maine.

The fee applies to bulk oil (containers of more than five gallons), not to prepackaged oil in smaller containers. The statute provides no exemptions based on who the purchaser or end user is, nor with respect to what the purchaser or end user will do with the oil. Exports of motor oil to another state are not Maine sales, and would not be subject to the new fee. All premiums must be paid monthly to the state tax assessor.

Maine Rep. Ted Koffman (D-Bar Harbor) said he introduced the amendment to last Octobers law as a means to address concerns about its effectiveness and ease of implementation. At a hearing we heard from contractors and fleet owners who were distressed by the paperwork required by the bill, Koffman told Lube Report.

He said the income stream generated by last Octobers law had so far proven lower than required by the Finance Authority of Maine. After several discussions with various representatives of oil change services, retail stores and bulk oil supplies, we concluded that obtaining the fee from the fewest number of payers was more practical, and would secure the revenue required to support the clean-up bond, Koffman said.

Kevin King, operations manager for Westbrook, Maine-based fast lube Prompto Inc., said the legislature claimed the switch would make it easier for the state to collect the fees successfully. They felt that if they only had six or seven people to collect it from, then it would be easier than if they had to collect it from retailers in general, King told Lube Report. There are lots of opinions on that. Ultimately, the cost is pushed on to anybody who buys bulk oil, which is a lot of automotive places, but not all of them.

King said that Prompto, because it is also a distributor of bulk motor oil, will have to pay the new fee. It will also still impact the companys fast lube operations. That fee will still be passed on to the customer, he explained. Its just if you operate a small gas station, and use boxed oil, you no longer pay a fee. I told them that the math doesnt work. They cant collect more money by eliminating the oil changes from people who get the oil from boxed oil because 20 percent of our business is boxed oil. So theyre not going to get more money – theyll get less money.

He hopes the legislature will consider an alternative method in its next session. We suggested that the proper way to do this is to charge anyone who sells oil and an oil filter in the retail business, which would spread the fee over a wider variety of people, King said. I also suggested they should force places like Advance Auto, as they do in New Hampshire, to collect used waste oil. If youre going to be in an oil change business for a do-it-yourselfer, they should take all of the good with the bad.

The Maine state law that went into effect Oct. 1 imposed the fee of $1 to $3, depending on gross vehicle weight, on each motor oil change as part of an effort by the state legislature to pay for cleanup of the former waste oil sites that operated from 1965 to 1980.

The sites are in Plymouth, Ellsworth, Casco and Presque Island, Maine. The Plymouth site was a federal Superfund site. Known as the Portland/Bangor Waste Oil Services sites, they were contaminated when oil and solvents leaked into the surrounding ground.

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