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American Truck Dealers Starts Suspend the FET Week

The American Truck Dealers (ATD), an association made of sellers of heavy-duty trucks, has advocated for the suspension of the federal excise tax (FET) on new trucks and trailers since at least April. Now, they have called for a week of advocacy to convince Congress to suspend the excise tax, citing the coronavirus pandemic’s economic impact as yet another reason to do so.

Federal Excise Tax

When a business buys a heavy-duty truck or trailer, they pay a 12% excise tax. According to the ATD’s data, 2019 sales of Class 8 trucks exceeded $33.8 billion. Assuming the tax is factored into the price, that means truckers paid over $3.6 billion more than they would have without the tax in 2019.

Chris Pappas, a Democrat from New Hampshire, is circulating a letter that shares the sentiment of the ATD. He believes suspending the tax to reduce the cost of purchasing new vehicles is an easy way to stimulate the economy and get more truckers on the road during the current pandemic.

“The FET on heavy-duty trucks, first implemented to help fund World War I, is hitting truck sales hard during this [COVID-19] pandemic. At 12 percent, this tax has grown to become one of the highest percentage excise taxes and adds approximately $21,000 to a vehicle’s cost. In addition to the positive impact a suspension will have on the industry and its workers, the FET causes truck owners to delay upgrading to safer, more fuel-efficient equipment.”

The ATD expressed similar thoughts back in April. “Trucking industry leaders have united in support of suspending the FET because weakened truck demand compounded by the coronavirus pandemic is expected to suppress truck sales in the U.S. by 50% this year. Last month [March] alone, Class 8 truck orders dropped by 52% compared to last year. This decline in sales is partly due to closures of truck manufacturing facilities and dealerships, some of them government-ordered.”

Conclusion

Pappas hopes the suspension will be included in the economic stimulus bill the House of Representatives may consider in July. Republicans, with an overwhelming share of the trucker voting base and a disdain for taxes, are likely to approve of the suspension. It existing as a section of a much larger bill, however, the chances of it becoming law are contingent on what else is in the bill and what Congress and President Trump think of the bill holistically.

We can tell you one thing for sure: if the bill passes and the tax is suspended, it will become easier than perhaps ever before to get a new truck or trailer.

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