From consumers to businesses to lawmakers, the one consensus is that the US economy moved with the trucking industry. Yet despite PPP loans, relief packages, and stimulus incentives, a good portion of the revenue generated by the trucking industry goes right back to the government in the form of taxes. The Owner-Operator Independent Drivers Association (OOIDA) has identified two specific taxes that have been burdening the trucking industry for years. Now, the OOIDA is pressuring Congress to alleviate those taxes in some way to provide the trucking industry with the injection of relief it needs to kick things into high gear.
Federal Excise Taxes and the Trucking Industry
Federal Excise Taxes are nothing new, but by percentage, the one levied on the trucking industry is the highest. The Federal Excise Tax on the trucking industry – in the simplest terms – forces fleets and owner-operators to pay fees on new equipment. On average, each new Class-8 vehicle has excise taxes amounting to $20K. For fleets of any size, new purchases take a lot of extra capital. However, for the past 18 months, fewer new vehicles have been purchased, and that trend will likely continue as trucking companies try to retain as much revenue as possible during the pandemic. Recently, the ATA reported that more fleets would consider purchasing new vehicles if the Federal Excise Tax were to be reduced or suspended, which is why the OOIDA is pushing Congress on this matter.
Taxes on Heavy Vehicle Use
The Heavy Vehicle Use tax is under scrutiny by the OOIDA because of the financial duress it places on the trucking industry. In addition to tolls, quarterly IRS obligations, and the excise tax mentioned above, owner-operators and fleets must pay over $500 every year for each vehicle in operation. This is a flat vehicle usage tax, so smaller fleets are hit harder, but large fleets pay that tax. The OOIDA wants to suspend or eliminate the Heavy Vehicle Use tax to help trucking companies retain revenue so they can improve operations and help jumpstart the economy.
As with all legislation, action on federal tax laws will take time, and since this year is more chaotic than others, nothing may happen until 2021. If you are an owner-operator or a fleet owner, and you need to boost your cash flow, contact the experts at Single Point Capital. Our team will convert your outstanding receivables to cash within a single day, so you can carry on your operations and remain successful for the long haul.