Trucking groups lobby against excise tax on new trucks

Dive Brief:

The Modernize the Truck Fleet (MTF) coalition is lobbying against the federal excise tax (FET), which adds 12% to the cost of class-8 trucks and trailers, and has sent a letter to four congressional leaders asking for it to be removed, according to a press release emailed to Supply Chain Dive.
The coalition says getting rid of the tax would allow trucking companies to more easily update their fleets with newer and more efficient trucks. The MTF alliance includes the American Trucking Associations, National Trailer Dealers Association, Associated Equipment Distributors and other industry groups.
The excise tax on the sale of new trucks is used to fund the Highway Trust Fund that provides money for highway and mass transit capital projects. The fund totaled $41 billion for fiscal 2018 with 87% of the revenue coming from the excise tax on gas and diesel fuel, according to the Tax Policy Center.

Dive Insight:

"Repealing the tax would deploy new, cleaner and safer heavy-duty trucks and trailers by making them more affordable – particularly for small businesses," reads the letter, which the coalition sent to Senate Majority Leader Mitch McConnell, R-Ky., Senate Minority Leader Chuck Schumer, D-N.Y., House Speaker Nancy Pelosi, D-Calif., and House Minority Leader Kevin McCarthy, R-Calif.

Legislation was introduced in the House and Senate earlier this year that would eliminate the FET on new trucks and trailers, but neither of these bills has been given a vote since being introduced. The coalition is asking lawmakers to consider the FET when passing either an infrastructure bill or in the reauthorization of the Fixing America's Surface Transportation (FAST) Act.

The text of the bill introduced in both chambers of Congress says the tax can add between $12,000 and $22,000 to the cost of a heavy truck, tractor or trailer, and the average age for trucks on the road is nearly 10 years old.

The trucking groups say bringing newer trucks to the roadway will increase fuel efficiency and safety.

It also says the funding that comes from the FET on trucks and trailers should be replaced with "a more consistent revenue source," but the letter to lawmakers doesn't expand on what this new revenue stream would look like. The bills introduced in Congress similarly do not provide an alternative source of revenue for the Highway Trust Fund, but simply look to repeal the FET.

It's not clear if any of these Congressional leaders support the FET repeal. None of them are co-sponsoring the existing legislation. If anything does move forward, it won't be until at least September as House members left Washington Thursday for the August recess.

Companies should look carefully at a truck suppliers' FET calculation when buying a new truck, according to KPMG, because there are many components — like jobsite equipment and refrigeration units — that are not subject to the tax and can result in significant savings.