Kendra Hems is the president of the Trucking Association of New York, based in Albany.
New Yorkers thrive on an efficient economy where goods are readily available, shelves are stocked and delivery is near instantaneous. In fact, our dependence on this infrastructure is so absolute — and its reliability so certain — that it often slides into the background of our lives. Consider the trucking industry, which is often overlooked in policy discussions despite its foundational role in this ecosystem: Nearly 90% of communities in New York depend exclusively on trucks to move their goods.
But the hundreds of thousands of New Yorkers who comprise this industry are struggling under high costs imposed by Albany — costs that handicap small businesses that make up the trucking industry — and pose a real threat to Onondaga County’s business community, which is uniquely freight-intensive.
Lifting the burden on the industry will be a complex task, but a reasonable place to start would be for lawmakers in Albany to consider a phase out of the Highway Use Tax (HUT), a tax imposed only on commercial vehicles, and replace it with a more equitable system that will raise more money for New York while reducing burdens on New York’s carriers.
Of course, this may seem like a difficult ask in a state like New York — but the HUT is a unique case that deserves special attention from lawmakers. The Empire State is one of just five states nationwide with a similar tax, which puts us at a massive competitive disadvantage and raises the cost of entry for entrepreneurs interested in logistics.
There is good reason for our isolation: the tax is calculated through a complex combination of the truck mileage tax, highway use permit fees and the fuel use tax. The HUT is complicated to calculate, and a typical motor carrier could be subject to more than 50 different tax rates, making compliance extraordinarily burdensome for both operators and the state.
To make matters worse, it is also not working for New Yorkers, as just a third of all collected resources are devoted to infrastructure and the costs of this onerous burden prevent investment in new, cleaner freight technology.
Because the collection is self-reported and the state has few enforcement tools, many out-of-state companies choose to evade the tax altogether, with little recourse for state regulators. While there is an audit system in place, it is more likely for a New York company to be selected, and they are far more likely to pay the toll. The most recent data shows a 45% to 53% rate of evasion, resulting in a loss of more than $120 million in revenue to the state, largely driven by delinquent out-of-state carriers at the expense of New York’s own companies.
However, HUT’s funding is vital and should not be lost under HUT reform. To be clear, the trucking industry is willing to invest in the infrastructure we use every day. In fact, the industry already pays 29% of all highway taxes, tolls and fees owed by motorists despite representing only 7% of the vehicle miles traveled in the state.
New York should instead increase other fees or taxes related to trucking, specifically registration and/or fuel tax, to replace the revenue that would be lost with HUT reform. An increase in registration and/or fuel tax would ensure all commercial users are paying the tax, not just those based in New York, and that the $1.2 billion in taxes paid by our industry at the state and federal level continues to support good infrastructure across the state. Fortunately, Assembly Member William Magnarelli has introduced legislation to do just that. Now, it will be incumbent on his colleagues in Albany to support this common-sense solution.
Trucking is ubiquitous in New York’s economy, but it’s continually squeezed on all sides with onerous fees and taxes. There is a better way.
Reforming the antiquated, unnecessary HUT and replacing it with a more efficient taxation system would help make the interconnected, fast-paced economy upon which our state depends even more reliable, encourage small business growth in Syracuse and across the state, and ensure tax equity for all motor carriers. That is an outcome everyone should be able to support.
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