Bill Seeks to Repeal Federal Excise Tax on Heavy-Duty Trucks

June 21, 2017 by Clarissa Hawes

A Republican congressman from California introduced a bill Tuesday to repeal a 12 percent federal excise tax on heavy trucks originally designed to help pay the cost of fighting World War I a century ago.

The bill by Rep. Doug LaMalfa, H.R. 2946, called the Heavy Truck, Tractor and Trailer Retail Federal Excise Tax Repeal Act of 2017, now heads to the House Ways and Means Committee for review.

The tax “adds tens of thousands of dollars to truck purchases and directly impacts the cost of food, consumer goods and other products Americans need,” LaMalfa said. “Even worse, truck owners large and small pay this tax whether a truck is driven 100,000 miles or never driven at all, forcing them to pay taxes on an investment that may not be generating any revenue.”

“Our customers are paying nearly 20 percent in taxes on these new heavy-duty trucks because on top of the federal excise tax, they still have state and county taxes to pay,” said Angie Porto, finance manager at Tampa Truck Center.

The dealership, located in Tampa, Fla., sells new Freightliner and Western Star trucks.

“We sell a lot of new trucks to large fleets and they are going to pay the federal excise tax because they are used to it, but if it was repealed, that would be very helpful to our smaller customers and owner-operators, who are trying to get a couple of new trucks running with a warranty,” she said. “We typically require them to pay the federal excise tax as a down payment on new trucks.”

The tax is the highest of any federal excise tax levied by Congress, according to Steve Parker, chairman of the American Truck Dealers, which represents more than 1,800 commercial truck dealers in the U.S. and is a division of the National Automobile Dealers Association.

Manufacturers also support the repeal.

“Daimler Trucks North America supports the goals of the legislation – repealing an incredibly high consumer tax on cleaner, more fuel efficient, safer trucks, while acknowledging the need to ensure the Highway Trust Fund remains solvent,” said Sean Waters,  the truck manufacturer’s director of product compliance and regulatory affairs.

It adds $12,000 to $22,000 to the cost of a new heavy-duty truck, depending on the vehicle. The average tax on a truck in the heaviest Class 8 weight segment is just over $18,000.

The tax raises billions of dollars annually for the federal government. It will bring in close to $5 billion this year, according to an analysis by the non-profit Tax Policy Center. It collected $4.5 billion in 2015, according to ATD.

All types of federal excise taxes raised about $98 billion for the federal government in 2015, according to the Tax Policy Center.

The truck tax has grown from 3 percent, when it was incorporated into the Highway Trust Fund in 1955, to 12 percent today.

It is placed on new sales of trucks with a gross vehicle weight rating, or GVWR, in excess of 33,000 pounds.

“Repealing the truck tax will help small businesses invest in new equipment while jump-starting domestic manufacturing, and Congress should address this issue as we consider how to reform our outdated tax code,” LaMalfa said.

The truck dealers group supports efforts to repeal the tax.

“The FET depresses new heavy-duty truck sales and delays the deployment of cleaner, safer and more fuel-efficient trucks,” Parker said.

Similar legislation introduced in 2012 to repeal the tax was unsuccessful.

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