Highway Tax Equity and Simplification Act of 1999 (S.1056)
BILL SUMMARY The Highway Tax Equity and Simplification Act of 1999 is designed to improve the equity among taxpayers paying into the Highway Trust Fund. It doing so, it eliminates 3 of the separate taxes paid into the Highway Trust Fund and replaces them with a straightforward tax that fairly distributes the tax burden among highway users. Although TEA 21 restructured the budgetary treatment to ensure that Highway Trust Funds would be spent, and therefore broadly addresses concerns about those users contributing to the Trust Fund, the Congress did not take any steps in TEA 21 to improve the fairness among taxpayers contributing to the HTF. Under current law, some users pay too much into the trust fund relative to the costs they impose on the nation's highway system while others pay too little. This legislation addresses this imbalance. SPECIFIC POINTS Tax Simplification -- 3 Taxes Replaced with 1 Specifically, this bill eliminates three taxes (the 12% sales tax on new trucks, the tire tax, and the Heavy Vehicle Use Tax) and replaces it with a straightforward and fair axle-weight distance tax. The taxes that are eliminated are either poor surrogates for user impact or raise relatively small amounts of money and are duplicative of the new axle-weight distance tax. Direct Correlation Between Taxes and Road Damage Pavement and bridge damage imposed by trucks is directly correlated to axle-weight loads and distance traveled. This bill recognizes this clear and direct relationship and imposes user fees based on this principle. No tax increase for trucks overall The bill collects the same amount of tax revenue from trucks overall as current law. Under current law, the U.S. Department of Transportation projects that taxes paid by trucks will account for $11 billion of revenue annually, the same as under the bill. Eliminates "Corporate Welfare" for Heavy Trucks By reforming the Highway Trust Fund taxes, this legislation eliminates the "corporate welfare" for some who today enjoy large subsidies paid for by the rest of the users of the Highway Trust Fund. Eliminates the perverse provisions in current law For example, the Heavy Vehicle Use Tax (HVUT) in current law doesn't apply to "heavy trucks". The HVUT is capped at 75,000 pounds -- meaning that "heavy trucks" don't pay any more in taxes as their weight increases even though the extra weight does exponentially more damage to the nation's roads and bridges. Secondly, the HVUT has no mileage component meaning that a truck registered at 70,000 lbs traveling 10,000 miles per year pays the same HVUT tax as another 70,000-pound-truck traveling 100,000 miles per year - not a fair or sensible result. ADMINISTRATIVE BURDEN The bill requires that this tax be paid on a quarterly basis just like the Heavy Vehicle Use Tax of current law. In other words, no additional filings than are required under current law. You simply pay taxes according to the distance you traveled and your registered weight. In other words, it is no more complicated than reading your odometer and your truck registration. Current Mileage Filing Requirements for Interstate Carriers Under current law, all Interstate trucks are required to file with their "base state" mileage logs that report mileage driven in individual states. This existing requirement of the International Fuel Tax Agreement (IFTA) is more detailed than what is required for the axle-weight tax included in this bill, which only requires the aggregate total of all mileage driven. Reduces Double Taxation on Toll Roads This bill does not eliminate the problems of double taxation for the trucking industry, but it does reduce the extent of the double taxation (i.e., paying a toll and paying Federal taxes on the same mileage) compared to current Federal law. To increase the tax fairness of the proposal, the bill allows trucks to claim as a tax credit against the axle-weight distance tax, axle-weight taxes that are attributable to use on a toll facility (e.g., the Oklahoma Turnpike, the Pennsylvania Turnpike, Ohio Turnpike, Florida Turnpike, etc.). Eliminates "Diesel Differential" The bill also eliminates the so-called "diesel differential", where diesel is taxed at a higher rate than gasoline, i.e., reduce diesel tax from 24.3 cents to 18.3 cents, the same rate as gasoline) Overall Tax Equity Still Short by $4 billion annually Proposal does not achieve perfect equity among all contributors to the Highway Trust Fund. Although the bill equalizes the relative tax burden among trucks -- under this bill trucks will still underpay their fair share of Federal taxes by $4 billion annually. State Transportation Departments Support Weight-Distance Taxes The American Association of State Highway and Transportation Officials (AASHTO), the association representing State Transportation Departments, supports weight-distance taxes. AASHTO's policy resolution on this matter finds: "truck taxes based upon a combination of the weight of the vehicles and the distance they travel more equitably distribute financing responsibility proportional to costs imposed on the system than other tax alternatives." AASHTO policy call for substituting a weight-distance tax for the heavy vehicle use tax and all other federal user fees on trucks except for a federal fuel tax -- (the HTESA proposal).