Congress Mulls Depreciation, Other Trucking Tax Incentives

Congress is considering several bills providing extensions of tax breaks for trucking, including renewal of the bonus depreciation for capital spending on items including trucks.

The 100% bonus depreciation for capital investments last year was said to be a major factor in helping carriers buy and manufacturers sell trucks.

Other tax extensions affect fuels.

Begun in 2010 as part of the economic stimulus, the bonus depreciation tax break expired Dec. 31.

Sen. Christopher Coons (D-Del.) introduced a bill that would extend the tax break through 2012, meaning equipment buyers could deduct 100% of the purchase cost the first year rather than spread the deduction over several years.

Senate Majority Leader Harry Reid (D-Nev.) has also incorporated the bonus depreciation extension into a bill that would create tax incentives for new hiring by small businesses.

As of Dec. 31, many tax incentives for the alternative fuels industry also expired. Before that, biodiesel producers received a $1-a-gallon tax credit and natural gas producers a 50-cent-a-gallon credit.

Advocates for alternative fuels and for the vehicles that use them gathered in Washington last week to drum up support for extending the tax credits, which they said the nascent alternative fuel industry needs in order to strengthen its foothold in the market.

“These incentives have leveraged billions in private investment and unleashed American ingenuity and technology innovation,” said a March 27 letter to congressional leaders from Transportation Energy Partners, which represents the Clean Cities coalition that promotes alternative fuels and vehicles.

“I am really excited because for the first time in my entire career, I see the possibility; I know that we are entering what someone aptly called a poly-fuel economy,” Jim Bruce, vice president of energy policy for UPS Inc., told a March 27 breakfast gathering the global carrier held for the advocates.

UPS has natural gas trucks running from the Port of Los Angeles to Las Vegas where they refuel and travel on to Salt Lake City.

And FedEx Express this year is deploying in various cities all-electric vehicles called the Newton Step Van made by Smith Electric Vehicles Corp.

Other alternative fuel tax extensions that expired Dec. 31 are those for electric vehicle conversion and for developers of alternative fueling stations.

Biodiesel producers are hoping their tax credit will be extended soon, Ben Evans, spokesman for the National Biodiesel Board, told Transport Topics.

“Obviously, the closer we get to the election, the tougher things get,” Evans said. “I think you see more politics enter the process and the chances of any significant legislation passing get slimmer.”

Bipartisan bills to extend the biodiesel tax credit have been introduced in the Senate by Maria Cantwell (D-Wash.) and Chuck Grassley (R-Iowa) and in the House by Aaron Schock (R-Ill.) and Collin Peterson (D-Minn.).

American Trucking Associations supports extending the bio-diesel tax credits, spokesman Sean McNally said.

“We have a renewable fuel standard which requires companies, essentially, to sell us biodiesel,” McNally said, referencing the annual production standards set by the Environmental Protection Agency.

“Given that we’re a captive audience, anything that will hold down the price of fuel is good and that tax credit, we believe, holds down that price of fuel,” McNally said.

Alternative fuel advocates said they were closely watching a bill introduced by Sen. Robert Menendez (D-N.J.) that would have repealed various tax incentives for oil companies and used the revenue generated to pay for the extension of the alternative fuel tax credits.

However, that bill failed to pass in the Senate on March 29.

ATA did not take a position on the Menendez measure to repeal tax incentives for oil companies, McNally said. However, he added, ATA is supporting another bill that has come to be known in both the House and Senate as the Natural Gas Act.

In the Senate, Menendez and Majority Leader Reid are sponsoring legislation that would give tax credits to those that buy and sell natural gas vehicles and to those that build the fueling stations.

In the House, John Sullivan (R-Okla.) and more than 80 bipartisan cosponsors have introduced a similar bill.