The Environmental and Safety Advantages of Ending the Federal Tax on New Trucks

The American Transportation Research Institute (ATRI) recently unveiled a significant study that underscores the environmental and safety improvements that could arise from repealing the 12% federal excise tax (FET) on new trucks and related equipment. This tax, rooted in the World War I era, has continuously posed a considerable financial burden on prospective truck buyers, adding anywhere from $20,000 to over $50,000 to the cost of new vehicles, which in turn discourages sales of modern trucks and trailers.

The research conducted by ATRI takes a deep dive into the age and annual mileage of the entire Class 8 truck population across the U.S. This analysis provides unique insights into how older trucks contribute to overall environmental and safety metrics within the industry. By demonstrating that a repeal of the FET can hasten the retirement of older models, the study makes a compelling case for change.

From an environmental standpoint, ATRI's findings indicate that repealing the FET would elevate the demand for newer, cleaner vehicles, resulting in a marked reduction in industry-wide CO2 emissions. Specifically, this repeal could lead to a decrease of 1.2 million metric tons of CO2 each year, the equivalent of nearly 66 million metric tons over a decade, thereby significantly benefiting the environment.

Safety is another critical area poised for improvement with the elimination of the FET. The research shows that accelerating the replacement of outdated trucks would not only lower safety technology costs but also enhance the implementation of Advanced Driver-Assistance Systems (ADAS). This upgrade is crucial as it could prevent approximately 750 crashes annually, saving the industry around $13.5 billion in crash-related expenses over ten years.

The report further delves into the limitations of the FET as a stable funding source for the Highway Trust Fund, pointing out the revenue's volatility stemming from unpredictable variations in new truck sales. Moreover, it highlights the narrow base of highway users contributing to the tax annually, which brings to light the necessity for finding alternative funding methods.

Jacqueline Gelb, President of the American Truck Dealers, emphasizes the importance of this research, stating, “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.”

The full report can be accessed through ATRI's official website, offering deeper insights into the research findings and further justification for the tax repeal.

ATRI continues to serve as a crucial nonprofit research organization within the trucking industry, focusing on vital studies that stress the essential role of freight transportation in maintaining a secure, efficient, and safe system across the nation. The implications of this research are profound, as it not only advocates for the industry’s modernization through new technology but also envisions a greener future for transport and logistics.

In light of these findings, stakeholders within the trucking sector and policymaking bodies must consider the long-term advantages of repealing the federal excise tax on new trucks, for both environmental sustainability and public safety improvements.