MEMA, HDMA Call for Repeal of Outdated Excise Tax Holding Back Modernization of Truck Fleet

Date: July 25, 2019

The Motor & Equipment Manufacturers Association (MEMA), on behalf of its division the Heavy Duty Manufacturers Association, has joined 20 other trade associations calling for congressional leadership to support legislation that would repeal the 12 percent federal excise tax (FET) imposed on heavy-duty trucks and trailers.
 
The tax, which was first imposed in 1917 to help fund World War I, is the highest percentage excise tax levied by the federal government and has grown outdated. MEMA and the cosigners of the letter argue that repealing the tax is overdue and would encourage a modernization of the truck fleet with new, cleaner and safer heavy-duty trucks and trailers by making them more affordable. In the century since it was first imposed, the tax has risen 300 percent and increases the cost of a new truck or trailer by $22,000.
 
“While new commercial trucks are the safest they have ever been, these new safety systems are expensive. And the 12 percent federal excise tax (FET), levied on certain trucks and trailers at the point of sale, is a major disincentive for new truck buyers looking to adopt these advanced safety technologies,” the letter says.
 
The letter was addressed to Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer, House Speaker Nancy Pelosi, and House Minority Leader Kevin McCarthy. Other high-profile groups who signed the letter include American Trucking Associations, National Retail Federation, and American Truck Dealers – a division of the National Automobile Dealers Association.
 
There are real economic and environmental costs associated with an aging fleet, MEMA and the other associations argue. Cleaner fuel and advanced engines developed in recent years have combined to reduce emissions of oxides of nitrogen (NOx) by 97 percent and particulate matter (PM) emissions by 98 percent. Trucks manufactured since 2010 have reduced carbon dioxide emissions by 43 million tons, NOx emissions by 21 million tons, and PM emissions by 1.2 million tons. It would take 60 of today’s new trucks to generate the same level of emissions as a single truck manufactured in 1989. Since 2010, new, more efficient diesel trucks have saved 101 million barrels of crude oil. Reducing the cost of replacing old vehicles with new, cleaner, more efficient vehicles makes sense.
 
“As an industry, we strongly urge you to end the burdensome FET in a potential infrastructure bill or reauthorization of the surface transportation act (FAST Act). Repeal of the FET will spur the deployment of cleaner and safer trucks,” the letter said.
 
MEMA and the cosigners support a plan to replace any revenue to the Highway Trust Fund (HTF) lost by repealing the tax with “funding alternatives that are user-based and provide more consistent revenue to fund the HTF” the letter says. “We stand ready to work with you to modernize infrastructure and the truck fleet and to enact reliable and sufficient funding options to replace the FET.”

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