FET repeal: The time is now

By Mike Kastner,  NTEA Managing Director
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This article was published in the September 2019 edition of NTEA News.

It’s time for Congress to both fix our infrastructure and repeal the Federal Excise Tax (FET) on heavy trucks.

Our infrastructure is in desperate need of modernization to keep the economy moving forward. Figuring out how to fund this repair and growth is up to Congress — and looking at all available, viable funding mechanisms is where FET repeal comes into play.

NTEA Managing Director Mike Kastner speaks during a Modernize the Truck Fleet press conference on Capitol Hill.

FET does contribute to infrastructure funding, but is an unstable, antiquated and complex method to raise revenue. Additionally, it levies the largest Federal Excise Tax in existence on a primarily domestically manufactured product.

Related: Support FET repea

NTEA is a founding member of Modernize the Truck Fleet (MTF), an industry coalition leading the charge to repeal FET. In June, MTF held a press conference on Capitol Hill with Rep. Doug LaMalfa (R-CA), the lead sponsor for FET repeal legislation. NTEA also spoke at the press conference.

In July, the coalition sent a letter, signed by more than 20 organizations, asking House and Senate leadership to support FET repeal when considering comprehensive infrastructure legislation. We noted repealing the tax would deploy new, cleaner and safer heavy-duty trucks and trailers by making them more affordable — particularly for small businesses. In addition, we pointed out FET has been the most inconsistent revenue source for the Highway Trust Fund (HTF) over the past 20 years.

First imposed in 1917 to help fund World War I, FET is the highest excise tax, on a percentage basis, levied by the federal government. It rose 300% since then and now increases the cost of new heavy-duty trucks and trailers by $22,000 on average. Coupled with an estimated $40,000 in new federal environmental and safety mandates per vehicle, this tax discourages the purchase of new, cleaner and safer heavy-duty trucks and trailers.

Vehicle emissions and safety
Although medium- and heavy-duty trucks account for only 4% of all vehicles on the road, they haul 70% of domestic freight, consume over 22 billion gallons of diesel and travel more than 200 billion miles per year. This means small improvements to a truck fleet can yield large results.

Over the past three decades, cleaner fuel and advanced engines have combined to reduce emissions of oxides of nitrogen (NOx) by 97% and particulate matter (PM) emissions by 98%. 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.

Furthermore, the coalition let congressional leadership know America’s heavy-duty trucking fleet is nearly 10 years old on average. New truck buyers can choose from an array of high-tech safety technologies, such as automatic emergency braking, adaptive cruise control with braking, lane departure warning and lane-keeping assist (with intervention), forward collision mitigation, blind spot warning, traction control, tire-pressure monitoring and automatic tire inflation, automatic wipers and headlamps, and side airbags for rollover.

While new commercial trucks are safer than ever, these safety systems are expensive. And the 12% FET, levied on certain trucks and trailers at point of sale, is a major disincentive for new truck buyers looking to adopt these advanced safety technologies.

Related: FET resources

One measure Congress should consider in the infrastructure debate is legislation — namely H.R. 2381/S. 1839, introduced by Reps. LaMalfa (R-CA), Peterson (D-MN) and Sen. Gardner (R-CO) — that would repeal FET. In its place, Congress should adopt user-based funding alternatives that provide more consistent HTF revenue.

As an industry, we strongly urge Congress to end the burdensome FET in a potential infrastructure bill or reauthorization of surface transportation act (FAST Act). FET repeal will spur the deployment of cleaner and safer trucks.

Take action
To contact your Representative about supporting H.R. 2381, enter your zip code at house.gov

You can reach out to your Senators for support of S. 1839 at senate.gov/senators/contact.

Learn more at ntea.com/repealfet.