Possible Elimination of Excise Taxes on Heavy-Duty Trucks

Heavy duty trucks could be getting cheaper. Here’s how Congress may make it happen.

Excise taxes are not new in America. The government has used these taxes on specific goods to raise federal money for centuries. When heavy duty trucks were first manufactured in the early 19 th century, the government didn’t waste much time utilizing the large vehicles as a new source of federal income. The excise tax on heavy duty trucks began in 1917 to help pay for the cost of World War I. Today, however, many argue that the excise tax on large trucks is no longer necessary and is debilitating to the American economy. Republican representative Doug LaMalfa has proposed a bill (H.R. 2946—Heavy Truck, Tractor and Trailer Retail Federal Excise Tax Repeal Act of 2017) that would eliminate the 12% excise tax on heavy duty trucks.

The excise tax on large trucks is the highest of any other American excise tax, according to American Truck Dealers (ATD) chairman Steve Parker—who represents over 1,800 heavy- and medium-duty truck dealerships. That means that the excise tax on trucks is higher than the excise tax on cigarettes and alcohol. “It’s time again for Congress to take a hard look at the federal excise tax on heavy trucks and determine if this tax has outlived its usefulness,” Parker stated.

In many states, customers are paying approximately 20% in taxes on new heavy-duty trucks when state taxes are added. The average heavy duty truck buyer pays almost $20,000 in taxes on top of the price of a new truck. This costly addition makes it difficult for small businesses to invest in new equipment. Parker claims that this depresses truck sales and hampers the advancement of cleaner, more fuel-efficient trucks. However, the excise tax does bring in an estimated $5 billion a year for the government, a detail that likely explains why similar legislation was shot down in 2012.

Only time will tell whether Congress will successfully pass the repeal this time. But if the bill does pass, it will be a welcomed relief to trucking companies and the trucking industry.

Konexial