Perspective: Pivotal Opportunity to Repeal FET
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Congress and President Joe Biden are currently focused on improving America’s infrastructure, with a key sticking point being how to pay for the improvements. This debate presents an opportunity for Congress to finally resolve funding for the insolvent Highway Trust Fund by replacing antiquated funding mechanisms — such as the federal excise tax on heavy-duty trucks and trailers — with solutions that are more reflective of today’s transportation landscape.
President Dwight Eisenhower instituted the trust fund to realize his vision of an interstate highway system back in 1956. And for a long time it was widely successful, paying for 90% of America’s interstate highway system. Even today, the Highway Trust Fund is now 84% funded by fuel taxes.
But the Highway Trust Fund has been insolvent since 2007, forcing Congress to continually bail it out. Part of the problem is that the transportation taxes that support the Highway Trust Fund haven’t kept up with the times. The fuel tax was last raised in 1993, and tremendous gains in fuel economy along with the rising popularity of electric vehicles — which do not pay fuel taxes — contribute to the shortfall.
One particularly archaic tax dedicated to the Highway Trust Fund is the FET on heavy-duty trucks and trailers. First imposed in 1917 to fund World War I, this tax was originally 3% and simple to administer, because trucks were simpler.
Bassett
Today, however, the FET is now at 12% and routinely adds $22,000 to the price of a new truck, is a burden to administer and taxes users the same amount whether the truck is driven 5,000 or 50,000 miles. Repealing the FET, which funds a small percentage of the Highway Trust Fund and is a volatile revenue source, and replacing it with a user-based fee would be more equitable and would provide a consistent revenue stream that would help meet our nation’s infrastructure needs.
Repeal of the FET also makes sense for the environment. More than 50% of Class 8 trucks on the road are more than a decade old, and yet this tax is levied on new, cleaner trucks. It would take 60 new trucks to generate the same level of emissions as a single truck manufactured in 1988. President Ronald Reagan once said, “If you want less of something, tax it.” But no one wants fewer trucks equipped with the latest environmental technologies.
The FET has outlived its usefulness and slows down our nation’s environmental goals. It’s time for Congress to include FET repeal in the upcoming infrastructure bill.
This week, the American Truck Dealers is descending virtually on Washington, D.C., to urge Congress to repeal the 12% FET and replace it with a user-based revenue source. Sen. Todd Young (R-Ind.) is expected to introduce FET repeal legislation in the Senate, and Rep. Chris Pappas (D-N.H.) is circulating a letter to House leadership urging repeal of the FET.
FET repeal is a bipartisan issue that is widely supported by the trucking industry. It’s time for Congress and the administration to work together to stop taxing cleaner, greener, safer trucks. I’m optimistic that if dealers continue to wage this battle we will prevail.
Steve Bassett is the owner of General Truck Sales in Muncie, Ind., and chairman of the American Truck Dealers, a division of the National Automobile Dealers Association that represents more than 1,700 medium- and heavy-duty truck dealerships.
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