Two Bills Propose Raising Federal Diesel Tax to Improve Highways, Boost Truck Sales

This story appears in the Oct. 11 print edition of Transport Topics.

Two bills introduced in the House shortly before Congress adjourned for the midterm elections would raise the federal diesel tax to pay for improved infrastructure or help boost new truck equipment purchases.

The legislation introduced by Rep. Laura Richardson (D-Calif.) would raise the federal diesel tax 12 cents a gallon to finance freight-specific projects, and Rep. Earl Blumenauer (D-Ore.) offered a bill that would increase the tax 7.3 cents as a replacement for the excise tax on new truck and trailer purchases.

“Transportation hubs across the nation are hampered by aging infrastructure and unsupported transportation corridors,” Richardson said in a statement. “This is badly needed legislation that will improve the flow of goods across the country, create jobs through the construction of infrastructure and improve the economy.”

The bill would take the 12-cent increase in the diesel tax and a transfer of $3 billion from the general fund to create a freight trust fund.

Richardson, a member of the House Transportation and Infrastructure Committee, represents a Southern California district that includes the Alameda Corridor and neighbors the ports of Los Angeles and Long Beach.

“This legislation will go a long way toward addressing critical bottlenecks on our nation’s most important highway corridors,” ATA President Bill Graves said in a statement. “These choke points cost the trucking industry tens of billions of dollars each year and force trucks to waste a tremendous amount of fuel.”

If the legislation is enacted, Graves said, it could “begin to fix these problem areas, which will reduce shipping costs and lower emissions from all vehicles.”

However, ATA again called on Congress to pass a new highway bill.

“While ATA has agreed to support a diesel tax increase to fund the most pressing freight needs on our highway system, we recognize that this will not be sufficient to address all of our surface transportation challenges,” ATA said. “Therefore, we encourage Congress to pass a similar gasoline tax increase to fund additional projects with significant national and regional benefits.”

In addition to setting up the new trust fund, Richardson’s bill would create an office of freight planning within the Department of Transportation and a National Freight Advisory Committee to allow “the private sector to have input into funding priorities and planning.”

Kelly Kolb, vice president of global supply chain policy for the Retail Industry Leaders Association, Arlington, Va., said the group supports the bill because it would help increase productivity and allow “the U.S. to better compete in the global economy.”

Similarly, Leslie Blakey, executive director of the Coalition for America’s Gateways and Trade Corridors, Washington, D.C., said the bill calls attention to the need for a dedicated, federal freight program, and it “will contribute to the important debate over how our nation should go about providing for our goods movement system demands.”

The bill was referred to the House Ways and Means Committee and to the transportation panel.

Blumenauer said his bill, introduced on Sept. 29, would protect the Highway Trust Fund from the volatility in the truck market.

“The Heavy Truck Tax Fairness Act would replace the 12% excise tax currently levied on new truck, trailer and certain tractor sales with a revenue-neutral increase in the diesel fuel excise tax of 7.3 cents per gallon,” Blumenauer said in a statement. “This modest change will be revenue-neutral over 10 years and will have the effect of smoothing resources available to the Highway Trust Fund and will ensure the U.S. can continue investing in our vital transportation infrastructure.”

In addition, Blumenauer said eliminating the tax also would boost sales — helping the economy and the environment.

“New trucks have significant environmental and safety advantages, and Congress should reduce the barriers to new truck acquisition,” he said. “To meet the demand for new trucks, most truck manufacturers will add employees, as most have significant engine and final assembly operations in the U.S.”

ATA spokesman Brandon Borgna said the truck group supported Blumenauer’s bill.

“Reducing the cost of new trucks, tractors and trailers will make the purchase of these cleaner, safer, more efficient vehicles more affordable,” he said, adding that the tax also applies to safety technology and fuel efficiency equipment.

Kyle Treadway, chairman of the American Truck Dealers and president of Kenworth Sales Co., which operates 20 locations in six Western states, said his group also endorsed the bill.

Treadway said the tax would lower the down payments for new buyers and those down payments would create more equity for those same customers.