Kentucky bill cuts taxes, increases registration fees for trucks

| 2/25/2003

A bill in the Kentucky General Assembly would exempt most tractor-trailers from usage taxes in the state, but as a trade off would slightly increase registration fees on many trucks.

However, there is some doubt whether the bill can make it through the Kentucky House before the end of the regular session March 7, less than two weeks away.

HB349 would exempt vehicles that weigh more than 44,000 pounds – the top four tag weights in the state – from the usage tax. Since all sales taxes in Kentucky go to the general fund, the tax on trucks is called a usage tax so the proceeds will go to pay for roads. However, the tax is not only applied against the purchase or sale of a truck. If a truck previously tagged elsewhere moves into the state, the usage tax is applied to the current value of that truck.

The usage tax on a $110,000 tractor-trailer purchase in Kentucky would run $6,000.

As part of the proposal to cut the tax, annual registration fees on those top four categories would increase. According to information on the General Assembly’s Web site, on trucks from 44,001 to 55,000 pounds, the bill would increase from $544 to $609; on trucks from 55,001 to 62,000 pounds, it would increase from $882 to $947; on trucks from 62,001 to 73,280 pounds, it would hike fees from $1,125 to $1,190; and on trucks from 73,281 to 80,000 pounds, fees would go up from $1,260 to $1,325. In addition, a $3 fee truckers pay to counties would increase to $20.

If the current law remained in place, many larger truck firms would likely move their truck registrations to an office in another state, Ned Sheehy, president of the Kentucky Motor Transport Association, said. However, owner-operators who cannot afford to have an office in another state would be forced to pay the usage tax on their trucks. Even the owner of a 10-year-old truck previously base plated in Oklahoma would have to pay a usage tax on that truck’s current value.

HB349 is intended to relieve them of that tax burden.

“We are the fifth-highest taxed state in the country,” Sheehy said. “It doesn’t take a rocket scientist to realize what the tax structure has done to the industry – it’s kicked it out.”

While there is little time left in the session, addressing the issue is vital to the trucking industry, Sheehy said. If the House bill does not move forward, one avenue being pursued by the trucking industry in the state is an amendment to a bill in the Senate.

“We are currently looking at that possibility,” he said.

“Kentucky has historically had pretty unfriendly tax policy toward small-business truckers,” Todd Spencer, executive vice president of OOIDA, said. “This is an opportunity to address those, and it’s an opportunity we should seize,”

Many truckers from other states had registered in Oklahoma. However, under new IRP guidelines that go into effect this year, most of those truckers will have to return their base plates to their home states. Lawmakers in several states, such as Arkansas, have introduced bills to remove that tax burden so smaller operators can afford to base plate at home and remain in business.

--by Mark H. Reddig, associate editor