A 12 percent federal excise tax imposed solely on heavy-duty trucks and trailers has come under fire from a collection of trade associations, who called on Congress last week to repeal the tax and replace it with funding alternatives.
Twenty trade organizations, including the Motor and Equipment Manufacturers Association (MEMA), American Trucking Associations and the National Retail Federation, oppose the tax in its entirety, labeling it burdensome and in the way of cleaner and safer trucks. The tax has been in place for more than 100 years. It was initially created in 1917 as part of the effort to fund World War I.
At that time, however, what a 12 percent cost represented was significantly different from the modern equivalent. The shift, the organizations argue, has been to the tune of 300 percent, adding essentially $22,000 onto the cost of any new truck or trailer. Stripping away that cost would allow truck fleets to invest in more modern, cleaner, and safer vehicles, the organizations argue.
“While new commercial trucks are the safest they have ever been, these new safety systems are expensive,” the organizations wrote in a letter to Congressional leadership. “And the 12 percent federal excise tax (FET), levied on certain trucks and trailers at the point of sale, is a major disincentive for new truck buyers looking to adopt these advanced safety technologies.”
Trucking fleets are aging. New fleets offer cleaner fuel and advanced engines that reduce emissions. The organizations point out that 60 modern trucks would equal the emissions of a single truck from 1989 — and use that to argue that any effort to reduce cost on newer vehicles would, therefore, be a sensible move.
That said, they admitted that any repeal could lose revenue for the Highway Trust Fund. To that end, they suggested funding alternatives but specified that they should be user-based and provide more consistent revenue.