A bill has been filed in Congress to appeal the federal excise tax, commonly known as the FET, on the purchase of new big rigs — a move that’s heralded in the trucking industry as a major step forward.
The Modern Clean and Safe Trucks Act of 2023 was introduced in both the House and Senate earlier this year by a bipartisan coalition of representatives and senators, led by Reps. Doug LaMalfa (R-CA), Chris Pappas (D-NH), Earl Blumenauer (D-OR), and Darin LaHood (R-IL) in the House, and Sens. Ben Cardin (D-MD) and Todd Young (I-PA) in the Senate.
The federal excise tax on purchases of new trucks adds, on average, nearly $25,000 to the cost of new equipment, slowing deployment of safer and more environmentally friendly vehicles, according to trucking industry leaders.
It’s a tax that Adam Blanchard, co-founder and CEO of Double Diamond Transport, Inc., describes as “outdated.”
“It disproportionately impacts certain segments of industry,” Blanchard said. “There is better way to get funds into the Highway Trust Fund than this tax. It’s difficult, especially at a time, too, when equipment costs have gone up 50% year over year, and when you tack on this tax, it hammers our ability to afford equipment.
“Smaller fleets don’t have the same purchasing power as larger fleets,” he continued. “It certainly is a regressive tax that needs to be eliminated.”
The FET, enacted more than a century ago, was initially designed to support American troops during World War I. The 12% tax on trucks is the highest-percentage excise tax levied on any product, according to the American Trucking Associations. This added expense acts as an impediment to creating jobs, reducing emissions, and improving highway safety.
“The current federal excise tax has become a barrier to our progress in encouraging cleaner and greener technology,” Sen. Cardin said. “I am proud to support tax policy that enables Maryland manufacturers to innovate and deploy cleaner and safer technologies in our trucking industry. Our legislation will spur growth and competitiveness while making our roads safer and less polluted.”
Albert Gore, executive director of the Zero Emission Transportation Association, says the tax harms American truckers and fleet operators by inflating the cost of heavy-duty trucks and limiting access to the many economic and public health benefits that come with transportation electrification.
“Medium and heavy-duty trucks account for 24% of all transportation carbon emissions in the U.S. but represent only 4% of vehicles on the road,” Gore said. “It is time to accelerate our movement towards modernized transportation fleets, and we must enable our nation’s fleet operators and truckers to join in this effort.”
Steve Bassett, immediate past chairman of American Truck Dealers (ATD) and dealer principal of General Truck Sales in Muncie, Indiana, said, “Indiana truck dealers commend Sen. Young for his leadership on this important legislation. Repealing the 106-year-old federal excise tax on heavy-duty trucks helps keep America competitive and is key to turning over an aging truck fleet.”
Back in Congress, Pappas said, “As a small business owner, I know just how challenging it can be to operate a business, and every potential saving we can deliver makes a difference. Cutting the federal excise tax on heavy trucks and trailers will help America’s Main Street economy grow, address supply chain challenges and shortages and lower costs for essential items that families need, including groceries and gas.”
Pappas further stated that the legislation “will also support the adoption of newer, safer, and cleaner trucks that reduce our dependence on foreign energy. I urge leaders in Congress to take up our bipartisan bill, and act to provide immediate relief to small businesses and consumers alike.”
LaMalfa said that regulators want to shift operators from older trucks to newer models — but on the other hand, the tax penalizes them for trying to update their equipment.
“Repealing the 12% federal excise tax on heavy trucks and trailers will help all businesses reduce costs, address supply chain challenges and lower costs for essential goods for families, especially in rural areas,” LaMalfa said. “The federal excise tax has outlived its original purpose by more than a century.”
LaMalfa said truckers are “an essential cornerstone in our supply chain, yet the tax code disincentivizes them from purchasing the most up-to-date equipment.”
“I’m urging Congress to support this common-sense, bipartisan bill and drop the burdensome tax preventing our truck drivers from having the most modern, highest technology, and safest equipment on the road,” LaMalfa concluded.
Scott McCandless, chairman of ATD and president of McCandless Truck Center LLC of Aurora, Colorado, notes that nearly half of America’s trucking fleet is over 10 years old.
“Repealing the federal excise tax will be a giant step toward achieving our national goal of turning over America’s aging truck fleet,” he said.
Linda Garner-Bunch has been in publishing for more than 30 years. You name it, Linda has written about it. She has served as an editor for a group of national do-it-yourself publications and has coordinated the real estate section of Arkansas’ only statewide newspaper, in addition to working on a variety of niche publications ranging from bridal magazines to high-school sports previews and everything in between. She is also an experienced photographer and copy editor who enjoys telling the stories of the “Knights of the Highway,” as she calls our nation’s truck drivers.
