VIRGINIA BEACH, Va. -- With the cost of gasoline rising, military exchange customers are asking, "Why isn't the price of gas on military bases cheaper, if the military exchanges are exempt from taxes?" The exchanges generally do not have to pay federal, state and local taxes for merchandise they sell, reported The Navy Times, except for gasoline.
By law, the Hayden Cartwright Act, 4 USC, Section 104, the exchanges must pay taxes on gasoline. They also must pay other costs, such as underground storage fees. Just as with gas stations outside the gate, those costs must be folded into prices [image-nocss] at the pump, said the report.
The higher the gasoline prices, the more complaints from customers to officials at the Army & Air Force Exchange Service, AAFES spokesperson Judd Anstey told the newspaper.
At overseas installations, gasoline prices are based on the U.S. Department of Energy's four-week average. In the United States, the exchanges do surveys to set the price of gasoline—surveys of at least five stations near the military installation that the local exchange officials have determined are its competitors. They set the price equal to the lowest price for each grade of fuel sold by those stations, Anstey said.
While the practice in the past has been to survey on a weekly basis, exchanges can do surveys more than once a day, exchange officials said. That is probably not going to be to the benefit of the customer, according to the report.
Anstey said officials started surveying more often because of the swings up and down in prices. "Customers were coming in and telling us about lower prices outside the gate," he said. "It all comes from the same place. We're paying market prices for gas."
AAFES will set the price below its cost, if necessary, to match the local market. Navy exchanges, however, are not authorized to sell below cost, the report said.
Dallas-based AAFES operates more than 3,000 facilities worldwide, in more than 30 countries, five U.S. territories and 49 states. It operates 143 retail stores and more than 2,200 fast food restaurants, such as Taco Bell, Burger King, Popeyes and Cinnabon. AAFES also provides military communities with convenience, specialty stores and movie theaters on installations worldwide, including locations in Operations Enduring and Iraqi Freedom.
The Navy Exchange Service Command (NEXCOM) is headquarters for the worldwide Navy Exchange System that oversees 107 Navy Exchange facilities and its 344 stores worldwide; 45 Navy Lodges; Ship 's Stores; Uniform Program Management Office and Navy Family Support Programs. It is based in Virginia Beach, Va.
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