Stop a Hike in the Federal Excise Tax on New Heavy-Duty Trucks

The Federal Excise Tax on New Heavy-Duty Trucks Should Be Repealed

Members Are Urged to Cosponsor H.R. 2946

Issue

Congress imposes a 12 percent federal excise tax (FET) on most new heavy-duty trucks. The FET depresses new heavy-duty truck sales and delays the deployment of cleaner, safer and more fuel-efficient trucks. This burdensome tax is in addition to the nearly $40,000 in new and recent federal emissions and fuel-economy mandates that will make it harder for small businesses to afford a new heavy-duty truck. Congress should pass legislation, H.R. 2946, to repeal this harmful and outdated tax to stimulate the sale of new heavy-duty trucks.

Background

The truck FET was originally imposed in 1917 to help defray the cost of World War I. This tax on most new heavy-duty trucks, tractors and trailers has grown from 3 percent, when it was incorporated into the Highway Trust Fund (HTF) in 1955, to 12 percent today. The FET is the highest excise tax on a percentage basis that Congress levies on a product.

This burdensome tax is in addition to the nearly $40,000 in new and recent federal emissions and fuel-economy mandates that, when fully implemented, will make it harder for small businesses to afford a new heavy-duty truck. These new regulations will add an additional $4,800 in federal excise tax to an average truck. If truck buyers cannot afford to purchase new trucks because of excessive taxes or burdensome regulations, the environmental and safety benefits of these new trucks will be nonexistent.

 The FET is a complex and difficult tax to administer. Truck dealers incur considerable cost navigating IRS regulations associated with collecting the tax, which adds between $12,000 and $22,000 to the price of a new heavy-duty truck. Since the FET is based on annual sales, which can vary greatly, the tax also fails to provide certainty to the Highway Trust Fund (HTF). Congress should consider a more reliable and consistent revenue mechanism to fund the HTF.

Rep. Doug LaMalfa (R-Calif.) introduced H.R. 2946, the “Heavy Truck, Tractor, and Trailer Retail Federal Excise Tax Repeal Act of 2017,” which would repeal the FET on most heavy-duty trucks. Repeal of this tax will help spur the production and sale of cleaner and safer trucks.

Key Points

  • The 12 percent FET on heavy-duty trucks is the highest percentage rate of any federal excise tax. Congress should repeal this tax to ensure quicker deployment of cleaner and more fuel-efficient trucks.
  • The FET hurts heavy-duty truck sales and inhibits job growth, directly impacting the 7.3 million Americans employed in the U.S. trucking industry.
  • Repeal of the tax would improve highway safety by spurring the sale of new trucks with new safety technologies that help prevent crashes and save lives. 

Status    

H.R. 2946 was introduced on June 20 and was referred to the House Ways and Means Committee. This bipartisan bill currently has 11 cosponsors. Representatives should cosponsor H.R. 2946 to spur new-truck sales and promote the entry of cleaner and safer trucks to modernize the trucking fleet.                      

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August 31, 2017