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July 21, 2020 12:45 PM, EDT

House Lawmakers Push Suspension of 12% Tax on New Trucks, Trailers

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A group of lawmakers is calling on House leaders to temporarily suspend an excise tax on new trucks as part of the next phase of COVID-19 stimulus assistance.

Led by Rep. Chris Pappas (D-N.H.), the lawmakers propose suspending the 12% federal excise tax on new truck and trailer purchases through the end of 2021.

“Immediate relief that extends until the end of 2021 is essential to supporting the workers in this industry,” the lawmakers wrote to Speaker Nancy Pelosi (D-Calif.) and other House leaders. Colleagues joining Pappas on the letter included Democratic Reps. Henry Cuellar of Texas and Bill Pascrell of New Jersey.

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“Suspension of the 12% [federal excise tax] 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,” they added.

Several stakeholders told House leaders they also support suspending the tax. The groups include American Trucking Associations, the National Association of Truckstop Operators and American Truck Dealers, a division of the National Automobile Dealers Association.

RELATED: June trailer orders more than double from year earlier

“On behalf of the trucking industry, we thank Rep. Pappas for his efforts to protect the 1.3 million jobs supported by Class 8 truck and trailer manufacturing,” noted Steve Bassett, American Truck Dealers chairman and dealer principal of General Truck Sales in Muncie, Ind. “[Federal excise tax] suspension is the right medicine for America’s trucking industry during this pandemic.”

A recent survey by ATA determined nearly 60% of fleets indicated that absent the tax they were either somewhat or very likely to purchase additional trucks and/or trailers beyond their scheduled buy period.

The World War I-era excise tax could add $21,000 to the cost of a new truck or trailer, opponents of the tax say. Last year, two House lawmakers unveiled the Modern, Clean and Safe Trucks Act, which would repeal the 12% federal excise tax.

“When the [federal excise tax] was introduced over 100 years ago, it was to help pay the costs of fighting World War I,” Rep. Doug LaMalfa (R-Calif.), a member of the Transportation and Infrastructure Committee, said upon introducing the bill. “Today, it has quadrupled from 3% to 12%, and the Ottoman Empire is no longer around. It’s an outdated and unnecessary barrier that discourages truck buyers from upgrading to more modern, cleaner and safer vehicles.”

Meanwhile, other industry stakeholders, such as the American Association of State Highway and Transportation Officials, continue to press the leadership in Congress to provide an “immediate infusion” of at least $37 billion as a way of preventing disruptions to transportation projects.

“With millions of Americans following stay-at-home orders, many state [departments of transportation] are facing severe losses in revenues, including dedicated user-fee revenues on which state transportation programs heavily rely. Projections continue to show decreases in state motor fuel tax and toll receipts as nationwide vehicle traffic reduction bottomed out at about 50% during the height of the pandemic,” AASHTO’s leaders wrote July 20.

“We urge you to provide state DOTs with an immediate infusion of federal funding in order to make critical transportation improvements and keep Americans working as our country looks to reopen stronger than ever.”

Newsmakers host Dan Ronan

Transport Topics introduces its newest digital interview series, Newsmakers, aimed at helping leaders in trucking and freight transportation navigate turbulent times. Audience members will gain access to the industry's leading expert in their particular field and the thoughtful moderation of a Transport Topics journalist. Our second episode — "The Evolution of Electric Trucks" — featuring Nikola founder and executive chairman Trevor Milton, will air live on July 28 at noon EDT. Registration is free but advance signup is required. Sign up today.

Congress and the White House have signaled the potential for finalizing negotiations on additional COVID-19 relief aid before the start of the August recess. Senate Republican leaders suggested the possibility of proposing various bills that would address concerns about medical supplies, the supply chain, school reopenings and social benefits. The chamber’s leader, Kentucky Sen. Mitch McConnell, said he intends to proceed with a “serious response to this crisis.”

“We won’t be wasting the American people’s time, like the House Democrats, with their multitrillion-dollar proposal to hike taxes on small businesses, cut taxes for Blue-state millionaires and send diversity detectives into the cannabis industry,” McConnell indicated as key Senate Democrats continue to urge Republican leaders to approve what would be the fourth coronavirus supplemental stimulus package this year.

Vermont Sen. Patrick Leahy, ranking member of the Appropriations Committee, insisted, “It has been more than 60 days since [Majority] Leader McConnell relegated the House-passed HEROES Act to his legislative graveyard. In that time, thousands of Americans have died and the need has grown exponentially because of the Republican ‘wait-and-see’ approach. We should begin bipartisan, bicameral negotiations on the next package immediately.”

In May, the House approved the $3 trillion Health and Economic Recovery Omnibus Emergency Solutions, or HEROES, Act. The House package would seek to increase aid for agencies responding to the pandemic, as well as provide $15 billion for highway programs nationwide.

“It will take about a trillion dollars to do state and local,” Pelosi recently asserted. “It will take several hundred billion dollars to open up the economy by testing, testing, testing. And it’s over a trillion dollars to do the unemployment insurance and the direct payments, which [Republicans] know that we have to do.”

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