Oregon’s Weight-Distance Tax Could Ride Into Sunset This Year
Dick Swennes, interim chairman and president, says the organization has spent considerable time “educating” legislators.
“I believe we have a 65% to 70 % chance of getting repeal this year,” he said. A draft bill has been prepared, although it has not yet been assigned a number.
A retired president of the Convoy Co. and a former chairman and president of the OTA, Swennes assumed both duties again after this year’s chairman, Kenneth Booze, owner of Eastern Oregon Fast Freight, died in a Jan. 6 plane crash (1-11, p. 5).
“We’ve done our homework,” said Bob Russell, director of government affairs, explaining that Oregon has a term limits law, and as a result, 25 members of the Oregon House are new and had to be briefed on the issue.
Russell also said OTA has built coalitions of support for the repeal measure. Supporters now include the Association of Oregon Industry, the Oregon Business Council, the Portland Chamber of Commerce and a number of other chambers of commerce.
Also, he said some interests that opposed repeal of the weight-distance tax in the past — notably the American Automobile Association — have dropped their opposition. Today, the only significant opposition comes from the Oregon Department of Transportation.
Equally important, Russell said, is the common purpose among trucking interests.
“Where in the past there was not unanimity within our industry, today there is absolute unanimity,” he said. That is significant because some truck operators have been afraid that under an alternative taxing system they would end up paying more than they do now.
Although the number of states with weight-distance taxes has been declining, Oregon is the only one where such a tax is the main source of revenue from trucking. Other states supplement the weight-distance tax with fuel taxes or higher registration fees. Oregon has a registration tax but does not impose a diesel fuel tax on commercial haulers.
One of the challenges is to fashion a replacement tax that will be seen as “revenue-neutral,” said John Sallack, executive vice president of OTA.
The result, Swennes said, will be that truckers in Oregon “will still pay very high taxes.”
major problem with the weight-distance tax, Russell said, is its complexity.
“There are over 100 different tax rates,” he said, “dealing not only with weight and miles but also with configuration questions, like the number of axles.”
This complexity, he said, makes the tax expensive to collect — and expensive to pay as well.
ne trucking company that uses a variety of configurations calculates that it costs about $25,000 to $27,000 a year to comply with the law.
The state pays a price, too. “It takes 188 people to administer the tax,” Swennes said. “Other states administer diesel fuel and registration taxes with fewer people.” However, jobs would not be trimmed immediately, he said, because the OTA-backed proposal calls for the weight-distance tax to be phased out over time.
One of the reasons the tax is so complicated to administer is the fact that so few states use this form. Twenty-two other states once had such a tax but have repealed it. Those still holding on to versions of the weight-distance levy are Idaho, Kentucky, New Mexico and New York.
“There is no reciprocity” with other states, Swennes said. “If there is a need to audit a trucker in Arkansas, the state has to send an auditor to Arkansas.”
OTA argues that the suspected high rate of evasion shifts more tax burden to those truckers who pay their full share. This is because ODOT sets the tax rates based on its revenue needs. If the revenue falls short, the department proposes an increase in the rate.
In each of the past three years, Swennes said, the trucking association has succeeded in defeating rate hikes that would have totaled 31%. He views this success as a sign of growing sentiment for replacing the weight-distance tax with more conventional measures, namely a diesel fuel tax and higher vehicle registration fees.
To guarantee that sufficient revenue will be collected under an alternative, OTA’s proposal calls for reviews every six months for the first two years after repeal.
“Since we have never had a diesel tax, legislators wanted to be reassured that the tax we propose will raise sufficient revenues,” Russell said.
He said the industry has “gone through a lot of turmoil with the regulation-deregulation debates in the ’90s, for example. And we have responded responsibly by trying to make ourselves more efficient.
“What we are asking now is that the government introduce efficiency into the way it collects taxes.”
