Group seeking to suspend excise tax on truck purchases pushes on in stimulus negotiations

The broad coalition behind the “Suspend the FET” (federal excise tax) initiative continues to push for its inclusion in whatever pandemic-fighting stimulus package emerges from current negotiations on Capitol Hill.

The idea behind suspending the FET on new truck sales is that such a step will spur sales of vehicles. The list of benefits that the advocates of the suspension tout is a long one: increased manufacturing activity to spur job creation (or retention); more trucks on the road with the latest safety equipment; better fleet fuel mileage; and a number of environmental benefits from displacing older trucks with new, cleaner ones.

The federal excise tax on trucks is 12%. The Auto Dealers Association has said it is the highest excise tax applied by Congress on the sale of any product.

Mike Joyce is the spokesman for the Modernize the Truck Fleet Coalition. It includes the American Truck Dealers and its parent, the National Automobile Dealers Association. They’ve been at the forefront of the push. But the coalition also includes engine manufacturers such as Cummins, trucking companies like Werner and trade associations, including the American Trucking Associations (ATA) and the Truckload Carriers Association.

While so much of the media focus has been on issues such as extending unemployment benefits, Joyce said the coalition has “continued to focus on those key members in the Congressional leadership,” making their pitch to suspend the tax. The House Ways and Means Committee and the Senate Finance Committee have been particularly targeted, as any tax-writing changes go through those panels.

But Joyce said the two chambers’ respective environmental and commerce committees have also been targets. “We do continue to educate lawmakers and we will continue to do so as the House, Senate and White House continue to negotiate,” Joyce said.

ATA report cited projecting 60% of fleets would make new purchases

The stimulative arguments being pushed by the coalition on suspending the FET have at the heart of it the sort of data found in a recent survey from the ATA: “60% of fleets would be either somewhat likely or very likely to buy additional trucks and trailers beyond currently scheduled purchases.”

The numbers on current production are horrendous. ACT Research reported in June that about 13,500 Class 8 trucks were sold that month, 43.2% less than the prior year. In April, the U.S. built about 2,500 trucks, the lowest in the history of ACT Research’s data going back to 1979.

What the coalition does not have yet in the Senate is somebody like Rep. Chris Pappas (D-NH), who has led the charge for Suspend the FET, even though there is no obvious tie for him. His district does not include a truck production facility.

Pappas was in early on the issue and is the primary signer of a recent letter to Congressional leadership, urging suspension of the FET through 2021. That letter had 55 signers, all of them Democrats.

“Suspension of the 12% FET on new heavy duty-trucks and trailers during this critical time could help fleets purchase new trucks and trailers, support U.S. truck and trailer manufacturing, supplier and dealership jobs, and advance our goals of improving highway safety and reducing emissions.” the letter said. “We urge you to suspend the FET until the end of 2021 in upcoming coronavirus legislation as the best and fastest way to help save or restore trucking-related jobs and jumpstart the economic recovery of this vital sector.”

John Kingston