Opinion: Over-Taxed, Under-Represented
b>By David Carmell
i>President
nited Transportation
On the one hand, I strongly agree with FedEx Freight’s chief executive officer that infrastructure improvements are needed. But on the other, it seems he has put the proverbial cart before the horse. Before we agree to support new industry taxes, we should explore and exhaust all other options for raising additional revenue. What’s more, we should be clear about where we want our money spent.
Consider the taxation possibilities of residential home heating oil, for example. As a distillate fuel, heating oil is related to diesel — but its users are neither taxed nor singled out at the federal level the way diesel users are at 24.4 cents per gallon. Nearly 6.7 billion gallons — 160 million barrels — of residential heating oil are consumed annually.
Why not push for a federal tax on heating oil at the current level for diesel fuel users or, at the very least, the same level as gasoline — 18.4 cents per gallon. Such a tax would produce between $1.2 billion and $1.6 billion annually — and in the long run would significantly improve fuel supply and availability by encouraging residential users to consider readily available alternatives to heating oil.
Consider, too, the federal excise tax. Under the federal revenue code, the trucking industry once again is singled out in having to pay FET on new Class 7 and Class 8 purchases. Since all vehicles that weigh more than 6,000 pounds receive essentially the same treatment under the 2004-2005 tax code, why aren’t all such vehicles taxed at 12%, as we are?
According to figures supplied by Autodata, 3.8 million light trucks weighing more than 6,000 pounds were sold in 2001. Using an average cost of $35,000 per vehicle, total resale would be $133 billion, which at a rate of 12% would generate tax revenues of nearly $16 billion for sport utility vehicles alone.
Why not take the next logical step and consider charging all SUVs weighing more than 6,000 pounds a fee of $550 annually — the same rate paid by Class 8 trucks for the Heavy Vehicle Use Tax. That would generate more than $6 billion in tax revenue.
The bottom line is that our industry is over-taxed and under-represented. It’s time to demand that others pay their fair share before we are singled out once again to pay additional taxes. If we are successful, at the very least our percentage paid and FET burden will be substantially reduced — enabling us to purchase more new equipment with additional equity.
Let us not forget that through no choice of our own, we will be buying more fuel and paying more fuel taxes because of the reduced fuel economy produced by the new, federally mandated engines designed to run on ultra-low-sulfur diesel.
How about lowering the maximum permitted gross weight to 70,000 pounds? That would improve fuel economy and safety, decrease infrastructure wear and tear and allow us to focus on specifying particular aerodynamics and the like.
Finally, we should adopt the philosophy that views the glass as half-full, not half-empty. Had we adopted that attitude earlier, we might have been at the forefront of the emissions fight — demanding engines that would produce at least 12 miles per gallon while still meeting the 2010 emission standards.
If we take that view now, we still could cut our fuel consumption in half, lessen our dependence on foreign oil, meet the 2010 emission requirements and prove that America’s resolve and ingenuity are alive and kicking. At the end of the day, we might actually have money left over to pay for additional infrastructure changes and new equipment, including those electronic onboard recorders.
Is this a pipe dream? No, or at least not as long as we are willing to commit to a Manhattan Project-style effort, starting by proposing that these new engine and emission targets replace the currently mandated 2010 engines.
Some may argue that it is too late and that too much has been invested to scrap the 2010 engines. I say, why should we continue throwing good money after bad and funding a faulty plan when there is a much better alternative?
If these and other reasonable suggestions become industry consensus, then we can move forward with a win-win action plan. Once that is done, if we still need additional money, my company will be first in line.
Until then, I ask why we should accept the status quo and the conventional thinking that we are the problem. Why should we accept our “mandated” fate as the sole source of funding and lone recipient of such punitive measures? We entrepreneurs and company owners, who put our money and guarantees on the line every day, need to stand up and be heard.
United Transportation is a provider of regional truckload, drayage and customized services with headquarters in Wrightsville, Ga.
This opinion piece appears in the Feb. 27 print edition of Transport Topics. Subscribe today.
