House bill would replace excise tax with fuel tax

| 10/8/2010

A lawmaker in the U.S. House has filed a bill to eliminate the 12 percent excise tax on new trucks and trailers and replace it with a diesel tax increase of 7.3 cents per gallon. Those buying equipment could see significant savings. For other truck owners, the shift would amount to a tax increase of $1,200 per year for 100,000 miles traveled.

U.S. Rep. Earl Blumenauer, D-OR, filed HR6312 on Sept. 29, calling it the Heavy Vehicle Fairness Act. The bill has been referred to the House Committee on Ways and Means.

How it affects truckers and their businesses depends on a lot of factors, which include equipment purchases, fuel surcharges and rates.

According to a survey conducted by the OOIDA Foundation, OOIDA members average 100,000 miles per year and achieve about 6 mpg. That would translate to a fuel tax increase of $1,217 per year if the Blumenauer bill becomes law.

The Foundation survey shows that the average cost of a new truck is $112,314. So, without a 12 percent excise tax of $13,478, the purchaser would realize significant savings.

Buyers of used trucks would not see a savings because the 12 percent federal excise tax only applies to new equipment. Therefore, those equipment owners would see their taxes go up.

Blumenauer filed the bill as an attempt to generate more money for the Highway Trust Fund. He and others on Capitol Hill have caught on that a reduction in miles traveled and reduced fuel consumption are not the only reasons the Highway Trust Fund has been on shaky ground in recent years.

As much to blame for the shortfall is that trucking companies have not been purchasing as many new trucks or trailers and the Trust Fund has been missing out on the 12 percent excise tax.

Blumenauer believes a 7.3-cent increase to the 24.4-cent federal diesel tax would provide money for the Trust Fund while the repeal of the federal excise tax will encourage more businesses to purchase new equipment.

Those purchasing new trailers, for example, would save $5,421 in excise taxes on a sticker price of $45,175 if the Blumenauer plan becomes law.

A recent online survey by Land Line Magazine asked truckers if they intended to make big-ticket purchases in the fourth quarter of 2010. Approximately 12 percent said yes, 76 percent said no, and 12 percent were undecided.

According to the OOIDA Foundation, the median age for OOIDA members’ trucks is seven years (2003).

– By David Tanner, associate editor
david_tanner@landlinemag.com