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FET repeal gains traction in COVID-19 stimulus package

July 23, 2020
Citing benefits of equipment upgrades, protecting manufacturing jobs, Modernize the Truck Fleet coalition continues to urge Congress to provide relief from century-old tax

Rep. Chris Pappas (D-N.H.)  on Tuesday sent a letter to the Democratic leaders of the U.S. House of Representatives calling for suspension of the 12% federal excise tax (FET) on heavy-duty trucks and trailers until the end of 2021 in the next coronavirus stimulus bill.

American Truck Dealers (ATD) leads the Modernize the Truck Fleet coalition, who with 196 industry groups and the UAW, encouraged House Democrats to sign the Pappas letter urging suspension of the FET. 

Rep. Pappas’ letter, signed by 55 House Democrats, was sent to Speaker Nancy Pelosi and House Democratic leaders. In his letter, Rep. Pappas underscored the impact that the pandemic has had on the trucking industry and called for suspension of the FET until the end of 2021. Temporarily suspending the 12% FET would immediately boost sales and protect trucking-related jobs, as Class 8 truck sales are expected to be down 50% this year due to government-ordered shutdowns and the pandemic.

A recent American Trucking Associations survey showed that 60% of fleets are likely to purchase new trucks if the FET were suspended. FET suspension would help save jobs, boost the economy and modernize truck fleets by accelerating the purchase of new trucks with the latest technology.

“Suspension of the 12% FET on new heavy duty-trucks and trailers during this critical time could help fleets purchase new trucks and trailers, support U.S. truck and trailer manufacturing, supplier, and dealership jobs, and advance our goals of improving highway safety and reducing emissions,” the letter stated. 

“On behalf of the trucking industry, we thank Congressman Pappas for his efforts to protect the 1.3 million jobs supported by Class 8 truck and trailer manufacturing,” said Steve Bassett, ATD chairman and dealer principal of General Truck Sales in Muncie, Ind. “FET suspension is the right medicine for America’s trucking industry during this pandemic.”

Coalition founding member NTEA – The Association for the Work Truck Industry, likewise announced it's support for the effort.

“Suspending the FET would serve as an effective incentive to deploy new, cleaner and safer heavy-duty trucks and trailers by making them more affordable — particularly for small businesses,” said Steve Carey, NTEA president & CEO. “NTEA, on behalf of the commercial vehicle community, applauds the efforts of Rep. Pappas, and encourages industry companies to contact their legislators in support of this issue.”

The Truck Trailer Manufacturers Association, National Trailer Dealers Association, and National Association of Trailer Manufacturers are also among the industry backers. In a recent interview, TTMA President Jeff Sims told TBB that a pandemic recovery package would be a good legislative vehicle for a suspension of the century-old tax.

“It’s been floated to a great number of people on the Hill, elected officials and all sorts of committees,” Sims said. “It seems like it might gain a little traction this time because it’s a temporary ask and not a permanent ask—that’s the biggest difference. We’re gathering some data now from all the trailer manufacturers: numbers of employees at the start of this year vs numbers of employees currently. We’re going to supply that to the [Modernize the Truck Fleet] coalition and just show the effects of what COVID has done.”

TTMA Chairman and Vice President, Regulatory and Industry Affairs, Wabash National Corp. John Cannon added: “As far as manufacturing is concerned, you take out that 12% and it completely changes the calculation for repair vs replace.”

The full text of Rep. Pappas’ letter and list of House Democratic signatories can be found here. An infographic further explaining the issue is featured below.