November 28, 2016

Attorney General Advises that Kentucky Counties May Not Enact Local Motor Fuels Tax

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In response to a request from Hardin County Magistrate E.G. Thompson, Kentucky Attorney General Andy Beshear recently issued an Opinion advising that a county may not enact a local motor fuels tax. Op. Att’y Gen. 16-010 (Nov. 10, 2016).  The Opinion relies upon Section 181 of the Kentucky Constitution, which authorizes the General Assembly to delegate to counties the power to levy ad valorem or license taxes only; the legislature may not delegate to counties or other local governments the power to assess excise taxes.

To determine whether a local motor fuels tax qualifies as an “excise tax”, the Opinion refers to Black’s Law Dictionary, which defines “excise” as “a tax imposed on the manufacture, sale, or use of goods (such as a cigarette tax), or on an occupation or activity (such as a license tax or an attorney occupation fee).”  The Opinion also relies upon Kentucky case law holding gasoline or motor fuels taxes are levied on the commodity itself and are excise taxes on the distribution, consumption, or use of the good. Because motor fuels taxes are excise taxes and the Kentucky Constitution does not authorize local governments to enact excise taxes, the Opinion concludes that a county may not enact a local motor fuels tax.