Bill targets truck excise tax, strong bipartisan support to repeal 12% excise tax
Bipartisan legislation to repeal the 12-percent federal excise tax (FET) on the sale of heavy-duty trucks and trailers is getting “strong support” from American Trucking Associations (ATA) and Modernize the Truck Fleet (MTF), a coalition of trucking industry stakeholders.
The bill, S. 2435, comes from Sen. Todd Young (R-Indiana) and Sen. Ben Cardin (D-Maryland), both members of the tax-writing Senate Finance Committee, which has jurisdiction over transportation-related taxes.
“The federal excise tax on heavy trucks is a relic from the first World War that’s now serving to keep cleaner, safer trucks off of our nation’s roads today,” said Chris Spear, ATA’s president and chief executive. “By repealing this antiquated tax, Congress can deliver a win for the environment, highway safety, manufacturing jobs, and supply-chain efficiency.”
The proposed legislation is intended to modernize America’s heavy-duty truck fleet and protect the 1.3 million jobs supported by the U.S. trucking industry, according to the coalition. Repeal of the FET would allow fleets to replace older heavy-duty trucks with “newer, safer and greener” trucks and trailers. The coalition is urging Congress to include the Young/Cardin legislation in the bipartisan infrastructure legislation.
Over the past 20 years, cleaner fuel and engines used in new trucks have combined to reduce nitrogen oxide emissions by 97 percent and particulate matter emissions by 98 percent, according to ATA. Since 2010, more fuel-efficient diesel trucks have saved 101 million barrels of crude oil and reduced CO2 emissions by 43 million tons. Life-saving, driver-assist safety technologies that weren’t widely available or effective a decade ago, such as automatic emergency braking, forward collision mitigation, and electronic stability technology, are now offered in new models.
“With most heavy-duty trucks over 10 years old, passing this bill is crucial to help America modernize its aging truck fleet,” said Steve Bassett, chairman of American Truck Dealers.
A 2020 ATA survey found 60 percent of fleets would be either “somewhat likely” or “very likely” to buy additional trucks and trailers beyond their currently scheduled purchases if the FET were repealed.
“Funding our national infrastructure need not come at the expense of highway safety or environmental health,” Spear said. “Our industry will continue to advocate for equitable and sustainable user fees that align the goals of safer roads, cleaner air, and a growing economy.”
The FET was first enacted by Congress is 1917 to help fund World War I and is the highest excise tax on a percentage basis that Congress levies on a product, often adding over $20,000 to the price of a new heavy-duty truck, according to MTF. The tax coupled with recent regulatory costs makes it more difficult for small businesses to afford a new truck, according to some trade groups.