TRALA Supports Move to Prevent Federal Excise Tax Increase
The Truck Renting and Leasing Association (TRALA) is supporting a move by members of the U.S. House of Representatives which will "express the sense of Congress" that the 12% Federal Excise Tax (FET), which applies to the purchases of truck tractors, trailers, and most straight trucks, among other items, not be increased. House Concurrent Resolution 33, introduced by Congressmen Ribble (R-WI) and Tim Walz (D-MN), along with 17 other bipartisan cosponsors, would not have the force of law, but it is an important symbolic gesture which shows the staunch opposition to any potential FET increase that will be present during consideration of the next federal highway bill which is expected to take shape later this year.
The resolution is ultimately grounded by the fact that the FET inhibits the sale of the cleanest, safest, and most fuel efficient trucks, and that the FET adds uncertainty and volatility to the Highway Trust Fund due to the cyclical nature of heavy duty truck and trailer sales.
Facts presented in the resolution state that the 12% FET on average adds $20,280 to the cost to purchase a new heavy duty truck. As most of TRALA's members are small, family owned businesses who rent and lease commercial trucks to other small businesses, TRALA agrees that this is a large financial burden which can clearly have a negative influence on member and customer decisions on whether or not to purchase new trucks and trailers. Additionally, when there is a decline in overall economic activity, as there was in 2008-2009, demand for new trucks and trailers sharply declines, which leads to declining revenue to the Highway Trust Fund.
The resolution also points out that compliance with several U.S. Environmental Protection Agency (EPA) mandates has added approximately $28,000 to the average cost of a new truck, so that in itself has brought increased revenue to the Highway Trust Fund given the fact that those increases are factored into the calculation of the 12% FET.
"Any increase in the FET would add another obstacle to getting the newest, safest, most technologically advanced trucks on the road. TRALA understands the need for a good transportation funding plan, but we don't believe that an FET increase is a responsible way to get there," TRALA President and CEO Jake Jacoby said.