Do railroad companies pay taxes on fuel?

Question

Do American & Canadian privately owned railroad companies pay taxes on the fuel use by their locomotives, that fuel tax that mostly go to the road system they don't use, or do they have a kind of tax refund for it?

Answer 1

Nope, they don't pay road tax.  It's fuel for off-road use, so no road tax is paid and the fuel is dyed per IRS regulations.  The fuel die is potent, once it's in your tank it takes several fillups to get the dye out, so not a good idea to poach.

Answer 2

Erick,

As far as I am aware railroads very much do pay a tax for their fuel to the tune of 4.3 cents per gallon.

On a side note, the big Class I systems do receive discounts on their fuel since they burn so much of it (and their fuel pads are supplied via pipelines that run directly to each location), something which other smaller railroads are not so fortunate to have.

Answer 3

Only fuel sold at commercial gas pumps have a road tax levied on them.

Rail and ship companies buy direct from distributors to fill their own tank systems.

Answer 4

Fuel excise taxes are collected to pay for road repairs. Railroads maintain their own rights of way. Therefore, they get a refund of any fuel excise taxes that they pay. This is American law.

Answer 5

in usa, railroads DO have to pay a fuel tax on diesel fuel.  however, this tax goes into GENERAL REVENUE for the usa as a deficit reduction program.  and yes, even amtrak has to pay this fuel tax too, just like the private freight companies.

since railroad fuel tax goes into general fund and not into any transport trust fund, the money does not come back to railroad nor to amtrak.  any rail funding by the govts come from general funds too, not from a trust fund, that is why amtrak has to keep getting annual appropriations from congress.

by contrast, fuel pump taxes that motorists pay goes to the Highway Trust Fund, and that money goes back out for spending on highways (primarily highways;  since ISTEA, NEXTEA, and SAFETEA-LU, a miniscule amount of highway funds can be spent on bike paths, intersections, and bus transit, but Amtrak and other heavy rail like Metra, NJT, etc are specifically prohibited from using any of these funds).

Airlines also pay a fuel tax, but that money goes into a separate trust fund that funds air stuff like FAA, airports, etc.  

offhand, not sure about canadian railroads on canadian soil, as taxation policies are different.  the railroads do have to pay GST i know, just like other businesses.

ill look it up later and update over the weekend.

Answer 6

no. they are able to purchase their fuel without the fuel tax added, much the same as any offroad, agricultural or construction fuel.

As you  pointed out, fuel taxes are to pay for the wear and tear of highways. They pay for the fuel their trucks and maintenance vehicles use on the highways of course.

railroads pay significant property taxes on their lines and improvements on those lines.

In many counties the railroad is the highest property tax payer.