National Automobile Dealers Association

Increasing the Excise Tax on Heavy-Duty Trucks Will Hurt Small Business

Members Are Urged to Cosponsor H.Con.Res. 52  

Some policymakers have discussed raising the 12 percent federal excise tax (FET) on most new heavy-duty trucks to address shortfalls in the Highway Trust Fund.  However, an increase in the FET would depress new heavy-duty truck sales and delay the deployment of cleaner, safer, and more fuel economical trucks.  With the highway bill due to be reauthorized later this year, Congress should pass H.Con.Res. 52, a concurrent resolution putting Congress on record opposing an increase in the FET.

The truck FET was originally imposed in 1917 to defray the cost of World War I.  The tax on highway heavy-duty trucks, tractors, and trailers has grown from 3 percent when it was incorporated into the Highway Trust Fund in 1955 to 12 percent today. The 12 percent truck FET is applied to the “first retail sale” of a heavy-duty truck, tractor or trailer and is paid by the trucking company or owner-operator and remitted to the dealer as part of the transaction.  A heavy-duty truck dealer is then required to submit such funds to the Internal Revenue Service which deposits it into the Highway Trust Fund.

The 12 percent FET on heavy-duty trucks is the highest excise tax on a percentage basis Congress levies.  This tax is in addition to the $30,000 in new federal emissions and fuel economy mandates that when fully implemented will make it even harder for small businesses to afford a new heavy-duty truck.  The 12 percent truck FET is further problematic for small business truck dealers because of its difficulty to administer. 

With the highway bill expiring on September 30, 2014, increasing the FET remains a distinct possibility.  In April 2013, the Senate Finance Committee released an “options paper” on infrastructure funding that contained a policy option of increasing the FET to 13 percent.  Additionally, testimony from the Department of Transportation noted that “clearly more revenues are needed” to address the shortfalls in the Highway Trust Fund, and a 2013 Government Accountability Office report noted that Congress should evaluate “increased revenues” on commercial trucking.

Key Points
• The 12 percent FET on heavy-duty trucks is already the highest percentage rate of any federal excise tax.  It would be counterproductive to raise this already burdensome tax even higher.

• An increase in the FET would depress new truck sales and would slow deployment of cleaner, safer, and more fuel efficient trucks into America’s trucking fleet.

• All heavy-duty trucks sold in the U.S. in 2013 were manufactured and assembled in North America. Increasing the FET would hurt the nearly 4 million Americans employed in the selling, servicing, manufacturing and operating of heavy-duty trucks.
H. Con. Res. 52 was introduced by Reps. Reid Ribble (R-WI) and Tim Walz (D-MN) on September 12, 2013 and referred to the House Ways and Means Committee.  The bill currently has 13 cosponsors. Members of Congress are urged to cosponsor H.Con.Res. 52.

March 2014