Chafee Proposes Simplified Heavy Truck Tax

Chafee told the Senate that the new axle-weight distance tax "varies based on the truck's axle-weight loads and the distance traveled, the exact same concepts that affect pavement damage." He said the bill would collect the same amount of tax revenue from trucks overall as current law, "about $11 billion annually," and that "the vast majority of trucks -- more than 5.9 million -- will see a tax reduction," compared with roughly 1.5 million that will see an increase. Text of S. 1056 appears in the Record.

HIGHWAY TAX EQUITY AND SIMPLIFICATION ACT OF 1999

Mr. CHAFEE. Mr. President, I am introducing today, the Highway Tax Equity and Simplification Act of 1999. This bill improves the equity among taxpayers paying into the Highway Trust Fund. Under current law, some users pay too much into the trust fund relative to the costs they impose on the nation's highway system, while other pay too little. This proposal more fairly apportions the tax burden to those who impose the greatest costs to our highway infrastructure.

In my statement today, I plan to briefly describe:

(1) Who pays too much and too little?

(2) Why the current tax structure fails?

(3) Why the current tax structure can't be just tinkered with and therefore needs radical change?

(4) A description of the plan I am introducing today.

Who pays too much and who pays too little?

If we look at the U.S. Department of Transportation's (DOT) latest cost allocation study of the highway system, it is clear that the current system does not fairly apportion the relative burden of taxes paid compared to costs imposed. At this time, I will submit for the Record a table which summarizes the relative burden among users based on analysis provided by the U.S. Department of Transportation.

As this table shows, some users are paying 150 percent of their share while some of the heaviest trucks are paying as low as 40 percent of their share. This is simply unfair and needs to be changed.

Another way to look at the unfairness of the current situation is to look at the per vehicle subsidies for heavy trucks that the U.S. DOT provided in their latest report to the Congress. In determining these subsidies, DOT simply subtracted what these vehicles should have paid in taxes, based on the costs they impose, from the amount of taxes they do pay. These subsidies are thousands of dollars per vehicle annually, with several above $5,000 per vehicle. At the end of my statement, I would like to enter into the Record a table showing a few examples of the subsidies summarized in the DOT report.

One of the reasons that the current tax structure fails so miserably at properly allocated costs is because neither the Congress nor the U.S. DOT has looked seriously at this issue for a very long time. The last significant cost allocation study was completed in 1982, more than 17 years ago. Without up-to-date analysis, it has been virtually impossible for the Congress to address this significant problem. I want to commend Secretary Slater for taking the initiative to have his Department provide an up-to-date analysis to the Congress. It is my understanding that DOT plans on keeping its analytical capability current regarding cost allocation so that the Congress doesn't have to wait every 17 years to address this issue.

Lack of good information is one of the reasons we have this unfair situation. The other reason deals more directly with basic engineering concepts. Highway pavement wear and tear imposed by a vehicle is related to two primary factors: how much you drive on the road and the weight of the vehicle.

Now, why is the weight of a vehicle so important?

It is important because pavement damage increases dramatically (actually exponentially) with weight. At this time, I will submit for the record information which shows the relationship between weight and pavement damage.

This chart shows that on a rural Interstate Highway, a single 100,000 pound standard tractor-trailer wears the equivalent of more than 1,700 automobiles. But, that truck certainly does not pay 1,700 times the amount of taxes.

On a rural arterial road, not built to Interstate standards, this dynamic is even worse, wearing the equivalent of 3,500 cars.

The problem with the current tax system is that it does not attempt to recover from trucks the dramatic pavement damage costs that are incurred as the weight of these vehicles increases. Until we address this fundamental principle, we will not have an equitable tax system.

Now, let's briefly look at each of the current taxes and how well they contribute to tax equity.

Excise Tax -- Under current law, we impose a 12 percent excise tax on the purchase of new trucks. This tax raises more than $2 billion annually. However, it has no relationship to either road usage or pavement damage and therefore does not contribute to tax equity.

Tire Tax -- the exist tax imposed on tires is moderately helpful for improving tax equity because it varies by miles driven and, to some extend by weight. However, it raises a relatively small amount of money (about $400 million per year or less than 5 percent of truck taxes) and therefore has a small effect on cost allocation.

Diesel Tax -- currently, diesel fuel is taxed at 24 cents per gallon. Although diesel taxes paid do vary by mileage, diesel taxes do a poor job of recovering pavement damage related to the weight of the vehicle. When the weight of a truck is increased, fuel use increases only marginally. However, the pavement damage imposed by that same vehicle goes up exponentially. Increasing diesel tax rates does not resolve this fundamental problem and actually exacerbates the unfairness of the current system. I would submit for the Record information which illustrates the problem.

Heavy Vehicle Use Tax -- this tax sounds like it might be the right place to address concerns related to weight, but it also falls well short of the mark. Even the name is deceiving. First, this tax does not vary by use. A truck that travels 10,000 miles annually and another that travels 100,000 miles pay the same tax. Secondly, although the name implies it applies to Heavy Vehicles, this tax is capped at 75,000 pounds, the point at which pavement damage goes up dramatically. I will also submit information which compares pavement damage and the Heavy Vehicle Use tax.

In summary, our review of the current taxes led me to conclude that they do a poor job of aligning taxes paid with road damage. In other words, they just can't get the job done. We need a new mechanism.

The bill I introduce today eliminates 3 of the separate taxes and replaces them with a straightforward tax that more fairly distributes the tax burden among highway users.

Specifically, the bill eliminates the tire tax, the 12 percent excise tax on new trucks, and the Heavy Vehicle Use Tax. It also eliminates the so-called "diesel differential," the additional 6 cents per gallon imposed on diesel fuel compared to gasoline, which is taxed at 18.33 cents per gallon.

To replace the lost revenue from these repeals and tax reductions, and to improve the equity of the truck taxes paid, the bill establishes a new user fee, an axle-weight distance tax. This new tax varies based on the truck's axle-weight loads and the distance traveled, the exact same concepts that affect pavement damage.

The bill collects the same amount of tax revenue from trucks overall as current law, about $11 billion annually.

Overall, there are more winners than losers under this bill. The vast majority of trucks -- more than 5.9 million -- will see a tax reduction. This compares to roughly 1.5 million who will see an increase.

The bill also reduces double taxation on toll roads by allowing a credit against the axle-weight distance tax for travel on a toll facility such as the Oklahoma or Florida Turnpikes.

This new axle-weight tax has long been recognized in the transportation community as the best way to tax trucks. As an example, the American Association of State Highway Transportation Officials, the association representing State Transportation Departments, policy resolution on this matter finds:

. . . truck taxes based upon a combination of the weight of

Now, I would like to briefly touch upon a few areas where I expect opponents of this effort may focus.

Some may argue that this is an anti-truck proposal and will impose new costs on consumers. My response to this assertion is that overall truck taxes are held constant and most of the trucking industry benefits from this proposal. Unfortunately, this benefit is at the expense of the portion of the industry that is doing damage to our nation's roadways without paying for it, and they will probably fight hard to keep their undeserved subsidies. The trick for the rest of the industry and for all roadway users is to recognize that virtually all of these arguments are attempts to distract us from the real issue -- should heavy trucks pay their fair share?

Heavy truck operators will try to argue about all sorts of ancillary items to distracts us from this fundamental issue. They will argue about tax evasion, administrative burden, additional record keeping and the like. Anything but the core issue of whether these trucks should pay their fair share.

As the Congress considers, this issue, I hope we can remain focused on this fundamental question and not be distracted by arguments that are not intended to squash efforts to address the unfair system we have today.

I urge my colleagues to support this effort.

Mr. President, I ask unanimous consent that the text of the bill, a summary of the legislation, and the materials previously cited be printed in the Record.

There being no objection, the material was ordered to be printed in the Record, as follows:

S. 1056

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the "Highway Tax Equity and Simplification Act of 1999".

SEC. 2. FINDINGS AND PURPOSES.

(a) Findings. -- Congress finds that --

(1) Congress should enact legislation to correct the distribution of the tax burden among the various classes of persons using the Federal-aid highways, or otherwise deriving benefits from such highways;

(2) the most recent highway cost allocation study by the Department of Transportation found that owners of heavy trucks significantly underpay Federal highway user fees relative to the costs such vehicles impose on such highways, while owners of lighter trucks and cars overpay such fees;

(3) pavement wear and tear is directly correlated with axle- weight loads and distance traveled, and to the maximum extent possible, Federal highway user fees should be structured based on this fundamental fact of use and resulting cost;

(4) the current Federal highway user fee structure is not based on this fundamental fact of use and resulting cost; to the contrary --

(A) the 12-percent excise tax applied to the sales of new trucks has no significant relationship to pavement damage or road use and does the poorest job of improving tax equity,

(B) the heavy vehicle use tax does not equitably apply to heavy trucks (such tax is capped with respect to trucks weighing over 75,000 pounds) and does not vary by annual mileage, thus 2 heavy trucks traveling 10,000 miles and 100,000 miles, respectively, pay the same heavy vehicle use tax, and

(C) diesel fuel taxes do a poor job recovering pavement costs because such taxes only increase marginally with weight increases while pavement damage increases exponentially with weight, and increasing the rates for diesel fuel will not resolve this fundamental flaw;

(5) truck taxes based on a combination of the weight of vehicles and the distance such trucks travel provide greater equity than a tax based on either of these 2 factors alone; and

(6) the States generally have in place mechanisms for verifying the registered weight of trucks and the miles such trucks travel.

(b) Purposes. -- The purposes of this Act are --

(1) to replace the heavy vehicle use tax and all other Federal highway user charges (except fuel taxes) with a Federal weight- distance tax which is designed to yield at least equal revenues for highway purposes and to provide equity among highway users; and

(2) to provide that such a tax be administered in cooperation with the States.

SEC. 3. REPEAL AND REDUCTION OF CERTAIN HIGHWAY TRUST FUND TAXES.

(a) Repeal of Heavy Vehicle Use Tax. -- Subchapter D of chapter 36 of the Internal Revenue Code of 1986 (relating to tax on use of certain vehicles) is repealed.

(b) Repeal of Tax on Heavy Trucks and Trailers Sold at Retail. - - Section 4051(c) of the Internal Revenue Code of 1986 (relating to termination) is amended by striking "October 1, 2005" and inserting "July 1, 2000".

(c) Repeal of Tax on Tires. -- Section 4071(d) of the Internal Revenue Code of 1986 (relating to termination) is amended by striking "October 1, 2005" and inserting "July 1, 2000".

(d) Reduction of Tax Rate on Diesel Fuel To Equal Rate on Gasoline. -- Section 4081(a)(2)((A)(iii) of the Internal Revenue Code of 1986 (relating to rates of tax) is amended by striking "24.3 cents" and inserting "18.3 cents".

(e) Conforming Amendments. --

(1) Section 4221(a) of the Internal Revenue Code of 1986 (relating to certain tax-free sales) is amended by striking "October 1, 2005" and inserting "July 1, 2000".

(2) Subchapter A of chapter 62 of such Code (relating to place and due date for payment of tax) is amended by striking section 6156.

(3) The table of sections for subchapter A of chapter 62 of such Code is amended by striking the item relating to section 6156.

(4) Section 9503(b)(1) of such Code (relating to transfer to Highway Trust Fund of amounts equivalent to certain taxes) is amended by striking subparagraphs (B) and (C) and by redesignating subparagraphs (D) and (E) as subparagraphs (B) and (C), respectively

SEC. 4. TAX ON USE OF CERTAIN VEHICLES BASED ON WEIGHT-DISTANCE RATE.

(a) In General. -- Chapter 36 of the Internal Revenue Code of 1986, as amended by section 3(a), is amended by adding at the end the following:

"SUBCHAPTER D -- TAX ON USE OF CERTAIN VEHICLES

"Sec. 4481. Imposition of tax.

"Sec. 4482. Definitions.

"Sec. 4483. Exemptions.

"Sec. 4484. Cross references.

"SEC. 4481. IMPOSITION OF TAX.

"(a) Imposition of Tax. --

"(1) In general. -- A tax is hereby imposed on the use of any highway motor vehicle (either in a single unit or combination configuration) which, together with the semitrailers and trailers customarily used in connection with highway vehicles of the same type as such highway motor vehicle, has a taxable gross weight of over 25,000 pounds at the rate of --

"(A) the cents per mile rate specified in the table contained in paragraph (2), or

"(B) in the case of a highway motor vehicle with a taxable gross weight in excess of the weight for the highest rate specified in such table for such vehicle, the cents per mile rate specified in paragraph (3).

"(2) Rate specified in table. -- The table contained in this paragraph is as follows:

Taxable Gross Weight in Thousands of Pounds Cents Per Mile [TABLE OMITTED]

"(3) Rate specified in paragraph. -- The cents per mile rate specified in this paragraph is as follows:

"(A) In the case of any single unit highway motor vehicle with 2 or more axles or any combination highway motor vehicle with 3 or 4 axles, the highest rate specified in the table contained in paragraph (2) for such vehicle, plus 10 cents per mile for each 5000 pounds (or fraction thereof) in excess of the taxable gross weight for such highest rate.

"(B) In the case of any combination highway motor vehicle with 5 or 6 axles, the highest rate specified in the table contained in paragraph (2) for such vehicle, plus 5 cents per mile for each 5000 pounds (or fraction thereof) in excess of the taxable gross weight for such highest rate.

"(C) In the case of any combination highway motor vehicle with 7 or more axles, the highest rate specified in the table contained in paragraph (2) for such vehicle, plus 2 cents per mile for each 5000 pounds (or fraction thereof) in excess of the taxable gross weight for such highest rate.

"(b) Determination of Number of Axles. -- For purposes of this section --

"(1) In general. -- The total number of axles with respect to any highway motor vehicle shall be determined without regard to any variable load suspension axle, except if such axle meets the requirements of paragraph (2).

"(2) Eligibility requirements. -- The requirements of this paragraph are as follows:

"(A) All controls with respect to the variable load suspension axle are located outside of and inaccessible from the driver's compartment of the highway motor vehicle.

"(B) The gross axle weight rating of all such axles with respect to the highway motor vehicle shall conform to the greater of --

"(i) the expected loading of the suspension of such vehicle, or

"(ii) 9,000 pounds.

"(3) Variable load suspension axle defined. -- The term 'variable load suspension axle' means an axle upon which a load may be varied voluntarily while the highway motor vehicle is enroute, whether by air, hydraulic, mechanical, or any combination of such means.

"(4) Termination of exception. -- The exception under paragraph (1) shall not apply after June 30, 2004.

"(c) Determination of Miles. --

"(1) Use of certain toll facilities excluded. -- For purposes of this section, the number of miles any highway motor vehicle is used shall be determined without regard to the miles involved in the use of a facility described in paragraph (2).

"(2) Toll facility. -- A facility is described in this paragraph if such facility is a highway, bridge, or tunnel, the use of which is subject to a toll.

"(d) By Whom Paid. -- The tax imposed by this section shall be paid by the person in whose name the highway motor vehicle is, or is required to be, registered under the law of the State or contiguous foreign country in which such vehicle is, or is required to be, registered, or, in case the highway motor vehicle is owned by the United States, by the agency or instrumentality of the United States operating such vehicle.

"(e) Time for Paying Tax. -- The time for paying the tax imposed by subsection (a) shall be the time prescribed by the Secretary by regulations.

"(f) Period Tax in Effect. -- The tax imposed by this section shall apply only to use before October 1, 2005.

"SEC. 4482. DEFINITIONS.

"(a) Highway Motor Vehicle. -- For purposes of this subchapter, the term 'highway motor vehicle' means any motor vehicle which is a highway vehicle.

"(b) Taxable Gross Weight. -- For purposes of this subchapter --

"(1) In general. -- Except as provided in paragraph (2), the term 'taxable gross weight' means, when used with respect to any highway motor vehicle, the maximum weight at which the highway motor vehicle is legally authorized to operate under the laws of the State in which it is registered.

"(2) Special permits. -- If a State allows a highway motor vehicle to be operated for any period at a maximum weight which is greater than the weight determined under paragraph (1), its taxable gross weight for such period shall be such greater weight.

"(c) Other Definitions and Special Rule. -- For purposes of this subchapter --

"(1) State. -- The term 'State' means a State and the District of Columbia.

"(2) Use. -- The term 'use' means use in the United States on the public highways.

"SEC. 4483. EXEMPTIONS.

"(a) State and Local Government Exemption. -- Under regulations prescribed by the Secretary, no tax shall be imposed by section 4481 on the use of any highway motor vehicle by any State or any political subdivision of a State.

"(b) Exemption for United States. -- The Secretary may authorize exemption from the tax imposed by section 4481 as to the use by the United States of any particular highway motor vehicle, or class of highway motor vehicles, if the Secretary determines that the imposition of such tax with respect to such use will cause substantial burden or expense which can be avoided by granting tax exemption and that full benefit of such exemption, if granted, will accrue to the United States.

"(c) Certain Transit-Type Buses. -- Under regulations prescribed by the Secretary, no tax shall be imposed by section 4481 on the use of any bus which is of the transit type (rather than of the intercity type) by a person who, for the last 3 months of the preceding year (or for such other period as the Secretary may by regulations prescribe for purposes of this subsection), met the 60-percent passenger fare revenue test set forth in section 6421(b)(2) (as in effect on the day before the day of the enactment of the Energy Tax Act of 1978) as applied to the period prescribed for the purposes of this subsection.

"(d) Termination of Exemptions. -- Subsections (a) and (c) shall not apply on and after October 1, 2005.

"SEC. 4484. CROSS REFERENCES.

"(1) For penalties and administrative provisions applicable to this subchapter, see subtitle F.

"(2) For exemption for uses by Indian tribal governments (or their subdivisions), see section 7871."

(b) Administration of Tax. -- To the maximum extent possible, the Secretary of the Treasury shall administer the tax imposed by section 4481 of the Internal Revenue Code of 1986 (as added by this section) --

(1) in cooperation with the States and in coordination with State administrative and reporting mechanisms, and

(2) through the use of the International Registration Plan and the International Fuel Tax Agreement.

SEC. 5. COOPERATIVE TAX EVASION EFFORTS.

The Secretary of Transportation is authorized to use funds authorized for expenditure under section 143 of title 23, United States Code, and administrative funds deducted under 104(a) of such title 23, to develop automated data processing tools and other tools or processes to reduce evasion of the tax imposed by section 4481 of the Internal Revenue Code of 1986 (as added by section 4(a)). These funds may be allocated to the Internal Revenue Service, States, or other entities.

SEC. 6. STUDY.

(a) In General. -- The Secretary of Transportation, in consultation with the Secretary of the Treasury, shall conduct a study of --

(1) the tax equity of the various Federal taxes deposited into the Highway Trust Fund,

(2) any modifications to the tax rates specified in section 4481 of the Internal Revenue Code of 1986 (as added by section 4(a)) to improve tax equity, and

(3) the administration and enforcement under subsection (e) of the tax imposed by section 4481 of the Internal Revenue Code of 1986 (as so added).

(b) Report. -- Not later than July 1, 2002, and July 1 of every fourth year thereafter, the Secretary of Transportation shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report on the study conducted under subsection (a) together with --

(1) recommended tax rate schedules developed under subsection (a)(2), and

(2) such recommendations as the Secretary may deem advisable to make the administration and enforcement described in subsection (a)(3) more equitable.

SEC. 7. EFFECTIVE DATE AND FLOOR STOCK REFUNDS.

(a) Effective Date. -- The amendments made by this Act shall take effect on July 1, 2000.

(b) Floor Stock Refunds. --

(1) In general. -- If --

(A) before July 1, 2000, tax has been imposed under section 4071 or 4081 of the Internal Revenue Code of 1986 on any article, and

(B) on such date such article is held by a dealer and has not been used and is intended for sale, there shall be credited or refunded (without interest) to the person who paid such tax (hereafter in this subsection referred to as the "taxpayer") an amount equal to the excess of the tax paid by the taxpayer over the amount of such tax which would be imposed on such article had the taxable event occurred on such date.

(2) Time for filing claims. -- No credit or refund shall be allowed or made under this subsection unless --

(A) claim therefore is filed with the Secretary of the Treasury before January 1, 2001, and

(B) in any case where an article is held by a dealer (other than the taxpayer) on July 1, 2000 --

(i) the dealer submits a request for refund or credit to the taxpayer before October 1, 2000, and

(ii) the taxpayer has repaid or agreed to repay the amount so claimed to such dealer or has obtained the written consent of such dealer to the allowance of the credit or the making of the refund.

(3) Exception for articles held in retail stocks. -- No credit or refund shall be allowed under this subsection with respect to any article in retail stocks held at the place where intended to be sold at retail.

(4) Definitions. -- For purposes of this subsection, the terms "dealer" and "held by a dealer" have the respective meanings given to such terms by section 6412 of such Code; except that the term "dealer" includes a producer.

(5) Certain rules to apply. -- Rules similar to the rules of subsections (b) and (c) of section 6412 of such Code shall apply for purposes of this subsection.

HIGHWAY TAX EQUITY AND SIMPLIFICATION ACT (HTESA) OF 1999

BILL SUMMARY

The Highway Tax Equity and Simplification Act of 1999 is designed to improve the equity among taxpayers paying into the Highway Trust Fund. In doing so, it eliminates 3 of the separate taxes paid into the Highway Trust Fund and replaces them with a straightforward tax that more fairly distributes the tax burden among highway users.

TEA 21 restructured the Highway Trust Fund's budgetary treatment to ensure that transportation taxes would be spent for transportation purposes. Congress did not, however, take any steps to improve the allocation of transportation taxes among highway users. Under current law, some users pay too much into the trust fund relative to the costs they impose on the nation's highway system while others pay too little. This proposal more fairly apportions the tax burden to those who impose the greatest costs to our highway infrastructure.

SPECIFIC POINTS

TAX SIMPLIFICATION -- 3 TAXES REPLACED WITH 1.

This bill eliminates three taxes (the 12% sales tax on new trucks, the tire tax, and the Heavy Vehicle Use Tax) and replaces it with a straightforward and" fair axle-weight distance tax. The taxes that are eliminated are either poor surrogates for user impact or raise relatively small amounts of money and are duplicative of the new axle-weight distance tax.

DIRECT CORRELATION BETWEEN TAXES AND ROAD DAMAGE.

Pavement and bridge damage imposed by trucks is directly correlated to axle-weight loads and distance traveled. This bill recognizes this clear and direct relationship and imposes user fees based on this principle.

NO TAX INCREASE FOR TRUCKS OVERALL.

The bill collects the same amount of tax revenue from trucks overall as current law. The U.S. Department of Transportation estimates that transportation taxes paid by trucks total $11 billion annually, the same as under the bill.

OVERWHELMING MORE WINNER THAN LOSERS.

Under the bill, the vast majority of trucks -- more than 5.9 million trucks -- will see a tax reduction. This compares to roughly 1.5 million who will see an increase.

ELIMINATES "CORPORATE WELFARE" FOR HEAVY TRUCKS.

By reforming the Highway Trust Fund taxes, this legislation substantially reduces the subsidy provided to the heaviest trucks using our nation's roadways. Most heavy trucks pay less into the Highway Trust Fund than the costs they impose on roads. The heaviest trucks pay less than half of the costs of damage they inflict.

ELIMINATES PERVERSE PROVISIONS IN CURRENT LAW.

The Heavy Vehicle Use Tax (HVUT) under current law doesn't apply to "heavy trucks". The HVUT is capped at 75,000 pounds -- meaning that "heavy trucks" don't pay any more in taxes as their weight increases even though the extra weight does exponentially more damage to the nation's roads and bridges.

Secondly, the HVUT has no mileage component meaning that a truck registered at 70,000 lbs traveling 10,000 miles per year pays the same HVUT tax as an identical 70,000 pound truck traveling 100,000 miles per year -- not a fair or sensible result.

ADMINISTRATIVE BURDEN.

Under the bill, taxes are paid according to the distance you traveled and your registered weight. The process is no more complicated than reading your odometer and your truck registration.

CURRENT MILEAGE FILING REQUIREMENTS FOR INTERSTATE CARRIERS.

Under current law, all Interstate trucks are required to file with their "base state" mileage logs that report mileage driven in individual states. This existing requirement of the International Fuel Tax Agreement (IFTA) is more detailed than what is required for the axle-weight tax included in this bill, which only requires the aggregate total of all mileage driven.

REDUCES DOUBLE TAXATION ON TOLL ROADS.

This bill reduces double taxation on toll roads by allowing a credit against the axle-weight distance tax for travel on a toll facility. (e.g., the Oklahoma Turnpike, the Pennsylvania Turnpike, Ohio Turnpike, Florida Turnpike, etc.).

ELIMINATES "DIESEL DIFFERENTIAL".

The bill also eliminates the so-called "diesel differential", where diesel is taxed at a higher rate than gasoline. Under this proposal, the diesel fuel tax is lowered from 24.3 cents to 18.3 cents, the same rate as gasoline.

OVERALL TAX EQUITY STILL SHORT BY $4 BILLION ANNUALLY.

Proposal does not achieve perfect equity among all contributors to the Highway Trust Fund. Although the bill equalizes the relative tax burden among trucks, the trucking sector as a whole will still underpay its fair share of transportation taxes by $4 billion annually.

STATE TRANSPORTATION DEPARTMENTS SUPPORT WEIGHT-DISTANCE TAXES.

The American Association of State Highway and Transportation Officials (AASHTO), the association representing State Transportation Departments, supports weight-distance taxes. AASHTO's policy resolution on this matter finds:

"Truck taxes based upon a combination of the weight of the vehicles and the distance they travel more equitably distribute financing responsibility proportional to costs imposed on the system than other tax alternatives."

AASHTO policy call for substituting a weight-distance tax for the heavy vehicle use tax and all other federal user fees on trucks except for a federal fuel tax -- (the HTESA proposal).

                 Cost allocation for cars and trucks

Underlying Principle -- Pavement damage goes up dramatically with weight.

On a rural Interstate highway, a 100,000 lb standard tractor- trailer wears the equivalent of more than 1,700 cars.

On a rural arterial road, the same truck is equivalent to 3,500 cars.

DIESEL FUEL TAX

Diesel Tax meets one of the two guiding principles discussed earlier, because the amount paid by trucks varies by mileage.

However, because diesel fuel usage only rises marginally with weight increases, while pavement damage increases exponentially, it also is a poor mechanism to align costs and payments.

Increasing rates for diesel, as is sometimes advocated by the trucking industry in reaction to concerns about truck underpayment, will not resolve this fundamental flaw.

HEAVY VEHICLE USE TAX (HVUT)

HEAVY VEHICLE USE TAX DOESN'T LIVE UP TO ITS NAME

1. The HVUT is a poor surrogate for cost responsibility as shown by the widening gap between the red and blue lines to the right. HVUT taxes go up slightly with weight while pavement damage goes up dramatically.

2. Although the word use is in its name -- this tax does not vary by use or mileage. A truck traveling 100,000 miles per year and another of the same weight traveling 10,000 per year will pay the same tax.

3. Although, the name implies it is targeted at heavy vehicles, it does not increase with truck weight. Incredibly, the tax is capped at 75,000 lbs, the point at which pavement damage goes up dramatically.