The American Trucking Associations (ATA) announced its support of congressional legislation introduced in late March that repeals a World War I-era federal excise tax (FET) on the purchase of new trucks, tractors, and trailers.
The FET adds a significant cost to purchasing commercial vehicles and has been widely criticized by trucking industry leaders and policymakers who argue that it hinders modernization and economic growth. “First implemented over a century ago to help finance America’s effort in World War I, the FET has become the largest excise tax on any product, adding $24,000 to the cost of each new clean-diesel tractor-trailer,” said AMA President and CEO Chris Spear in a statement.
“Keeping this antiquated tax on the books imposes an enormous hardship, particularly for the small fleets, family businesses, and independent truckers who make up the overwhelming majority of trucking. Removing this burden will allow motor carriers to replace their trucks with modern, safer, and cleaner equipment, which will, in turn, boost manufacturing jobs,” Spear said.
Congressman Doug LaMalfa (R-CA), a senior member of the Transportation and Infrastructure Committee, along with Chris Pappas (D-NH), Darin LaHood (R-IL), Salud Carbajal (D-CA), and Max Miller (R-OH) are leading the charge to eliminate the 12% federal excise tax on these vehicles, which amounts to a $6 billion yearly burden on the trucking industry. Known as the Modern, Clean, and Safe Trucks Act, the bipartisan representatives reintroduced the bill on March 27.
“This is the highest percentage-based tax Congress imposes on any product, yet it fails to be a reliable source of funding for the Highway Trust Fund,” said LaMalfa. “This tax forces buyers to stick with older, less efficient models and makes it harder for truckers to modernize their rigs, holding back the trucking industry from updating.”
Established during the Eisenhower administration, the Highway Trust Fund was intended to support state transportation projects and infrastructure improvements. However, it primarily depends on fuel tax receipts, which have proven insufficient in recent years.
Additional Industry Support for the Bill
Other trucking industry stakeholders also back the Modern, Clean, and Safe Trucks Act. “Repealing this 12% tax would empower our industry to reinvest in the specialized equipment we need, which features critical safety enhancements and cleaner-emission power units to serve the U.S. bulk segment. As costs continue to rise, this tax remains a significant barrier to upgrading our fleets and supporting a safer, more sustainable supply chain,” said Ryan Streblow, president and CEO of the National Tank Truck Carriers (NTTC).
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Sources: AMA, FreightPulse