U.S. House Representatives Doug LaMalfa (R-CA) and Collin Peterson (D-MN) have introduced a bill, H.R. 2381, that aims to repeal the federal excise tax, a tax on heavy trucks that has come under attack in recent years by truck dealers.
The 12% tax on heavy trucks was implemented in 1917, originally to help pay for World War 1. Today, revenue generated by the FET goes into the Highway Trust Fund.
“It’s an outdated and unnecessary barrier that discourages truck buyers from upgrading to more modern, cleaner, and safer vehicles,” said Rep. LaMalfa. “The FET is also the highest percentage-based tax that Congress imposes on any product, and it’s not even a reliable source of funding for the Highway Trust Fund.”
The issue is a hot one for truck dealers who have led the charge against the Federal Excise Tax, forming a coalition to fight the tax called Modernize the Truck Fleet that includes American Truck Dealers, Truck and Engine Manufacturers Association, NTEA –The Association for the Work Truck Industry and the Truck Renting & Leasing Association.
“The FET discourages truck buyers from purchasing the newest, safest and cleanest trucks and trailers available,” said Jodie Teuton, chairwoman of the American Truck Dealers and MTF steering committee member. “This tax is as outdated as biplanes and trench warfare. MTF applauds the bipartisan leadership Reps. Peterson and LaMalfa have shown by introducing this bill. MTF urges members of Congress to cosponsor H.R. 2381 to repeal the FET, which will help turnover the truck fleet and put newer, more fuel efficient and safer trucks on the road.”
At recent event for President Trump and his senior staff hosted by Bob Nuss of Nuss Truck & Equipment, Nuss delivered a letter to the President asking for his support of the FET repeal.
Senators LaMalfa and Peterson have said that the tax increases the price of new trucks to such a degree that truck buyers are more likely to purchased used or older trucks, slowing the adoption of newer, more fuel-efficient and low-emissions vehicles.
The National Truck Dealers Association applauded the legislation. NTDA president Gwendolyn Brown said, “The Federal Excise Tax has long been an unfair method of taxing the truck and trailer industry. The NTDA supports legislation that encourages the sale of newer trailers and that more fairly supports the construction and maintenance of our highways and roads.”
The Modernize the Truck Fleet coalition proposed including the bill in the larger infrastructure modernization bill that has become a priority for legislators in Washington, D.C. in recent years. The group stated that it was committed to repealing FET and identifying an acceptable replacement to sustain the Highway Trust Fund.
The NTEA has encouraged its members to contact their representatives in support of H.R. 2381, reiterating the point that it prevents truck buyers from adopting the latest equipment. The group also said the repeal would clear the way to better alternative funding mechanisms for highway repair and maintenance.
The Truck Renting & Leasing Association supports the bill as well saying that it and other members of MTF have been meeting with House Democrats and Republicans for months to build bipartisan support for the FET Repeal.
“The time has come to remove this outdated tax,” said Jake Jacoby, TRALA president and chief executive officer. “Congress needs a funding source for the Highway Trust Fund that is less volatile and that does not hurt manufacturers, truck dealers, and purchasers of new vehicles and equipment."