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April 11, 2012
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Bill Proposes Highway Trust Fund Tax Swap

A recent bipartisan bill (H.R. 4321) proposes to replace the 12 percent federal excise tax on the purchase of large trucks with a 6.3 cent-per-gallon increase in the federal diesel tax. The current federal diesel tax is 24.4 cents per gallon, including 0.1 cent per gallon dedicated to the Leaking Underground Storage Tank Trust Fund. The bill's sponsors stress that the tax swap would be revenue-neutral and would provide a more stable flow of revenues to the Highway Trust Fund. Sales of new trucks have declined with the recent recession and slow economic recovery. To illustrate, the Highway Trust Fund received $1.89 billion in gross excise tax receipts from trucks and trailers in 2009, but only $1.56 billion in 2010.

The American Trucking Associations support the bill, citing the importance of stable transportation funding. The ATA also noted that the current 15 percent excise tax can add $15,000 to the cost of a new truck, and that eliminating this tax could encourage truckers to purchase new vehicles with updated safety features and reduced emissions.

GO TO 2040 supports bolstering the federal and state motor fuels taxes in the short term. In the long term, these revenue sources should be replaced with new, more efficient user fees. Gas and diesel taxes are vulnerable to inflation and improving fuel economy, both of which reduce revenues and purchasing power over time. GO TO 2040 notes that new revenue sources could include strategies such as congestion pricing, parking fees, and public-private partnerships.

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