117 trucking groups push for temporary excise tax repeal in next round of federal relief

Dive Brief:

American Truck Dealers (ATD) has teamed with the American Trucking Associations (ATA) and 115 other groups to call for a temporary repeal of the federal excise tax (FET) on heavy-duty trucks and trailers. The 12% tax helps fund the Highway Trust Fund (HTF). ATD wants the provision in the next round of coronavirus relief legislation and spending, known as "phase four" of relief efforts.
Partially hurt by plant closures and reduced freight demand, truck sales of Class 8 units are expected to drop 50%. Steve Tam, vice president of ACT Research, told Transport Dive on Wednesday that he expects Class 8 sales to be within the range of 125,000 and 135,000 units.
Signatories include: UPS, Mack, Paccar, Navistar, Daimler, Volvo, Cummins, Allison Transmission, Eaton, Knight-Swift Transportation, Old Dominion Freight Line, the National Private Truck Council, the National Beer Wholesalers Association and the National Retail Federation.

Dive Insight:

Because the FET is part of the Highway Trust Fund, any suspension of the tax is bound to come up in talks over an infrastructure bill. Yet ATD noted the FET is the least consistent part of the HTF's funding mechanisms in the last 20 years.

President Donald Trump, a proponent of increased infrastructure spending, has floated the idea of cutting a big deal with Congress on a plan for highways, bridges and airports. On March 31, he floated the possible stimulus spending of $2 trillion to address the nation's repairs of roads, bridges and more.

But the question is how to pay. The infrastructure plan has the support of the ATA, which has said raising the gasoline-and-diesel taxes would be the best way to pay. The ATA prefers raising fuel taxes to new toll roads, and wants a national highway system unfettered by toll systems. The ATA has said the cost of collecting fuel taxes is under 1 cent per dollar, while tolling infrastructure can take 35 cents of each dollar.

But funding schemes could be cast aside during the COVID-19 crisis. The coronavirus problem — as well as low borrowing rates — gives Trump and Congress cover to put the entire bill on the nation's credit card.

Another politically enticing argument is that most Class 8 trucks and trailers are made in the United States, by companies such as Daimler Trucks North America, Mack, Wabash and Great Dane. Overall, 7.8 million Americans are employed in jobs related to trucking, according to the ATD and ATA.

"The trucking industry solidly supports the suspension of the FET to spur sales of newer, cleaner trucks and help support and bolster the jobs of the 7.8 million Americans employed in trucking," Steve Bassett, ATD chairman and dealer principal of General Truck Sales, said in a statement. "Unlike other stimulus programs, FET suspension does not require more paperwork, new compliance rules or a new program."

ATA's chief said new Class 8 models are safer and cleaner.

"(A) tax holiday on the antiquated federal excise tax would be good medicine to help with liquidity and to stimulate the purchase of newer, safer trucks and trailers," said Chris Spear, ATA President and CEO, in a statement.