Federal Excise Tax is hurting trucking industry

Published: Aug. 12, 2019 at 6:48 PM CDT
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Federal excise tax was originally enacted by Congress in 1917 to help pay for World War I.

Since then, the tax has increased from 3% to 12%.

That 12% tax is now deterring trucking companies from investing in new trucks that have more safety features.

"Since 2008, we've been pushed to make cleaner, safer trucks, and it seems like since then we've been punishing the same folks who want to buy them by charging them the extra (tax)," Branch Manager of I-State Truck Center in Sioux Falls, Doug Van Santen, said.

For example, on a new $160,000 commercial truck, the tax adds more than $19,000 to the total cost.

That added amount is keeping old trucks on the road and new trucks in the dealer's lot.

New trucks are equipped with safety features to save lives.

"These trucks will react quicker than the human body to a potential collision," said Van Santen.

It's not all about the money, but about keeping drivers safe.

With Congress working on new infrastructure bills, Van Santen says now is the right time to address the issue.

"If they look at it from the public safety view, it's a win win," said Van Santen.

There may be other, more practical, options legislators can implement.

"I do think that a proposal on a fuel tax, that everyone pays, will more than make up for this," President of S & B Transportation in Brandon, Shanna Gray, said.

South Dakota State Representative, Dusty Johnson, will be coming to Sioux Falls next week to discuss the concerns of the federal excise tax with local trucking companies.