Kentucky legislators struggle to get truckers tax relief

| 3/5/2003

Kentucky state senators have added provisions to two bills that would give truckers a break from heavy usage taxes in that state.

The tax relief had been offered earlier in a house bill, HB349. However, that bill’s prospects were considered uncertain, and supporters said they hoped to amend its provisions into a bill in the Senate.

“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.”

That effort bore fruit March 3 when a provision to exempt large trucks from the state’s usage tax were added to HB255 by Transportation Committee Chairman Virgil Moore, R-Leitchfield. According to a spokeswoman for the Senate Transportation Committee, the amendment to HB255, unlike HB349, would not increase registration fees, and it would charge a county clerk fee of $10, not $20. HB255 has been passed on to the Rules Committee, which will vote this week on whether to pass it to the full Senate.

March 4, another bill was amended to add the usage tax break. Ned Sheehy of the Kentucky Motor Truck Association said the amended version of HB293 would exempt semis larger than 40,000 pounds from the usage tax, and would increase registration fees $150 a year for the largest trucks, while the next three weight categories would see registration fees rise $125 a year. Those registration fees would be subject to apportionment.

The amendment to HB293 was offered by Senate Majority Floor Leader Dan Kelly, R-Springfield. It passed the Senate Appropriations and Revenue Committee by a unanimous vote.

Under the rules for this session, for either amended bill to become law, they must first pass the Senate before Thursday, March 6, and then pass the House.

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.

If the current law remained in place, many larger truck firms would likely move their truck registrations to an office in another state, Sheehy 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 and the two amended bills are 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.”

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