A group of 117 organizations, led by the American Truck Dealers, has written to leaders of Congress asking for a suspension of the 12% federal excise tax (FET) on new heavy-duty trucks and trailers. The request urges Congress to suspend the tax through 2021 and comes at a time when new equipment orders have collapsed.
“The trucking industry solidly supports the suspension of the FET to spur sales of newer, cleaner trucks and help support and bolster the jobs of the 7.8 million Americans employed in trucking. Unlike other stimulus programs, FET suspension does not require more paperwork, new compliance rules, or a new program,” Steve Bassett, ATD chairman and dealer principal of General Truck Sales in Muncie, Ind, said in a statement. “With our nation more dependent than ever on trucking to deliver goods and critical medical supplies, we urge Congress to suspend the FET to bolster our trucking sector and help our economic recovery.”
ATD is a division of the National Automobile Dealers Association (NADA).
The letter was sent this week to Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer, House Speaker Nancy Pelosi, and House Minority Leader Kevin McCarthy. Members of various committees in both the Senate and House also received copies.
In addition to ATD, The American Trucking Associations, Truckload Carriers Association, major trucking fleets and shipping associations, and most of the major truck makers signed the letter. All 117 signees are part of the Modernize the Truck Fleet (MTF) Coalition, formed in January 2019 by ATD.
“Like our customers across the economy, the trucking industry is suffering during this coronavirus crisis and shutdown. Truckers aren’t looking for a bailout as they keep America moving during these challenging times and prepare for our eventual recovery, but a tax holiday on the antiquated federal excise tax would be good medicine to help with liquidity and to stimulate the purchase of newer, safer trucks and trailers,” said Chris Spear, ATA president and CEO.
In the letter, MTF argues that with truck sales expected to decline up to 50% this year because of COVID-19, and the resulting plant closures, a suspension of the tax is necessary to jump-start manufacturing and the economy. FET adds an average of $22,000 to every new truck sold, ATD said
Truck orders fell to 7,800 units in March, 51% below March 2019, according to ACT Research. The firm predicts 2020 production will fall 53% after supplying 345,000 units in 2019. FTR said orders were 7,400 units in March.
“On a seasonally adjusted basis, March was the weakest Class 8 order month since February 2010, and with COVID-19 becoming an even hotter topic over the course of March, one wonders about the impact on order activity on a go-forward basis,” Kenny Vieth, ACT president and senior analyst, said.
MTF argued that removing the barrier that is the FET from the truck purchasing decision would be a boost to an industry in need.
“In addition to saving jobs, a suspension of the FET would spur sales of today’s cleaner and safer heavy-duty trucks and trailers by making them more affordable during this difficult economic time,” the letter stated.
MTF said suspension of the tax would lead to cleaner trucks on roadways with more advanced safety equipment.
“During this crisis, our nation has been more dependent than ever on our trucking fleet for delivery of goods and critical medical supplies, yet the average age of a truck on the road today is almost 10 years old. We believe the suspension of the FET can help both in keeping the nation well supplied and in rebuilding America’s vital trucking industry and related employment,” the letter said.
In 2018, U.S. Sen. Cory Gardner (R-CO) introduced S. 3052, legislation that would repeal the tax. It is similar to H.R. 2946, the “Heavy Truck, Tractor and Trailer Retail Federal Excise Tax Repeal Act” introduced in the House of Representatives by U.S. Representative Doug LaMalfa (R-CA) in June 2017.
The FET applies the tax on gross vehicle weight (GVW) vehicles above 33,000 pounds, trailers above 26,000 pounds, and tractors above 19,500 pounds, on their first sale. First introduced in 1917 to help pay for World War I, the tax has grown from 3% to its current 12%.
MTF has asked that the FET suspension be included in the next coronavirus economic recovery legislation.
The full text of the letter and list of signatories can be found here.