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12% new-truck tax panned at highway funding hearing

Lawmaker says federal excise tax unfair way to pay for roads and bridges

Lawmaker argues new-truck excise tax is not fit for trust fund revenue. (Photo: Jim Allen/FreightWaves)

WASHINGTON — Major trucking firms and their supporters have called for repealing a long-standing 12% tax on new tractors and trailers as a way to promote cleaner-burning vehicles, but a California lawmaker argues that the tax is also an inefficient way to prop up the Highway Trust Fund (HTF).

Speaking Wednesday at a House Transportation and Infrastructure subcommittee hearing on ways to cure the ailing HTF, Rep. Doug LaMalfa, R-Calif., agreed with groups such as the American Trucking Associations, the Truckload Carriers Association and the National Tank Truck Carriers that the 12% federal excise tax (FET), instituted in 1917, is a disincentive for buying newer and cleaner trucks.

However, “we also see it’s cyclical,” LaMalfa said, “because truck sales more or less move with the economy, with the amount of goods moving in the supply chain. So it’s not a source of funding that’s as steady as would be under other tax forms. So it’s important that when we have a discussion on the continuity of the revenue in the Highway Trust Fund, we also look at a way to relieve the burden on those who buy new trucks.”

LaMalfa encouraged support for a bill he is sponsoring, the Modern, Clean, and Safe Trucks Act, which would repeal the 12% FET “and distribute that [funding] burden over a wider population.”

Of the $1.4 trillion of tax receipts pumped into the Highway Trust Fund since its inception in 1956, about 8% — $114 billion — has been through the 12% FET on new tractors and trailers, according to testimony from Jeff Davis, a senior fellow at the Eno Center for Transportation, who also participated in the hearing.

Davis testified that Congress continues to give the HTF, which pays for highway and transit projects through revenue raised by gas taxes as well as the FET, “a privileged place in the budget process” while “pretending” that the HTF remains solvent.

“The reality is that the trust fund is only projected to be 82% self-sufficient [in FY2024], with that solvency dipping rapidly until the trust fund is only 60% self-sufficient [in FY2026], and dipping below 50% self-sufficient in 2031,” based on the latest projections by the Congressional Budget Office, he said.

Declining rates of miles traveled, fuel-efficient cars and Congress’ failure to cut spending or increase the gas tax have all contributed to the HTF funding crisis. Lawmakers since 2008 have been covering the shortfall with money transferred from the U.S. Treasury’s general fund, including $118 billion authorized by the Infrastructure Investment and Jobs Act in 2021.

“It’s time to either mend, or end, the Highway Trust Fund,” Davis contended.

“Either cut spending and/or increase user revenues to the point that they meet once again, or abolish the Trust Fund, devote the five existing user taxes back to the general fund, and have highway, mass transit, and highway and motor carrier safety funding fight it out with all other programs through the budget process.”

Officials from Oregon and Washington testified on the success of state-level programs that are transitioning HTF revenue sources away from fuel taxes and instead charging vehicles by the mile instead of by the gallon.

Click for more FreightWaves articles by John Gallagher.


  1. Stephen webster

    We need to keep the tax on gasoline and diesel power units. The battery portion of the truck as well as cost of natural gas station and storage units and the portion of natural gas trucks for the motor and conversion cost to natural gas or propane should be exempt from the Fed tax. The cost of trailers should be exempt from the tax. The tax on power units should pay for parking improvements to key intersections and tempary housing construction for sick or injured drivers

  2. Jon

    As a retired Dispatcher for a trucking company. I understand TAXES!, but the roads belong to all of Us. Amazon Vans and Cargo Trucks fill Our Highways and should be Taxed Annually for the miles they are on Our Roads. Some freeways and ramps are continuously congested, with no concern to the rest of Us…

  3. Joel Langrehr

    I think big government needs to get real and govern with in there means like rest of us have to your going to make it hard on new truck sales which = jobs trucking is backbone of this country

  4. Checkinto

    Raising more taxes, as if Trucker didn’t have enough expenses as the load boards continue to drop. Just putting a completely necessary function for the whole country into deeper hardship. Democrats really know how to screw everything up.

  5. Phil Dick

    Considering that heavy duty tractor trailers may be contributing to over 50% (some estimates for jurisdictions with intense freeze-thaw cycles may be as high as 80%) of the wear and tear on controlled access roads, asking for the tax to be retired seems like a request for the FET to be reduced begs a study on what the impact of heavy-duty trucks and trailers actually have on highways. This may be poking the bear.

  6. Victor

    Considering that the FET was instituted to pay for the debt incurred during WW1 and that debt was officially paid off just a few years ago, it would seem to me that the mandate for the FET expired with the debt. As such, the FET should be retired at this time regardless of the situation with the HTF. Of course, if Congress hadn’t been raiding any of the trust funds for their capital, they wouldn’t be facing insolvency. IOUs don’t gain interest. Capital does. Basic economics but we see how the government lacks that understanding every single day.

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John Gallagher

Based in Washington, D.C., John specializes in regulation and legislation affecting all sectors of freight transportation. He has covered rail, trucking and maritime issues since 1993 for a variety of publications based in the U.S. and the U.K. John began business reporting in 1993 at Broadcasting & Cable Magazine. He graduated from Florida State University majoring in English and business.