Study: Removing truck excise tax would benefit safety, environment

The American Transportation Research Institute (ATRI) today released research that highlights environmental and safety benefits that would result from the repeal of the 12% federal excise tax (FET) on new trucks and trucking equipment. 

A World War 1 era tax, the Truck FET has long been an issue for buyers of new trucks.  The tax currently adds an additional $20,000 to $50,000 to the cost of each new truck purchased, thus acting as a strong deterrent to new truck and trailer sales. 

Numerous trucking organizations have lobbied for the repeal of the tax.

This new research estimates the age and annual mileage of the entire Class 8 truck population in the U.S., offering insights into the influence of older trucks on industry-wide environmental and safety metrics. The research also illustrates how removing the 12 percent Truck FET can accelerate the replacement of older trucks.

From an environmental perspective ATRI found that, as a Truck FET repeal increases demand for new vehicles, industry CO₂ emissions will decrease at an accelerated rate. Each year as the industry adds newer, cleaner diesel vehicles to the fleet, emissions will be reduced annually by 1.2 million metric tons of CO₂ over current truck purchases. This equated to cumulative savings of nearly 66 million metric tons of CO₂ over a 10-year period.

Safety was also shown to benefit from a Truck FET repeal, according to ATRI. The accelerated replacement of older trucks reduces the cost of safety technologies, thus adding more advanced driver-assistance systems (ADAS) equipment to the industry. This would prevent nearly 750 crashes per year and saving nearly $13.5 billion in crash costs over 10 years, according to the ATRI study.

Finally, ATRI said the report outlines why the Truck FET does not function well as a funding mechanism for the Highway Trust Fund. ATRI’s research documents the revenue volatility due to annual fluctuations in new truck sales, as well as the limited number of highway users that pay the tax in any given year. 

“Truck prices clearly impact annual sales for our dealers, and reduce our customers’ ability to add new equipment to their fleet. This report greatly reinforces one of the key justifications for repealing the FET on new trucks by quantifying the real-world benefits a repeal will have on the environment and highway safety,” said Jacqueline Gelb, President of the American Truck Dealers. 

A copy of the full report is available on ATRI’s website here.