Federal excise tax (FET) has been a burden on the dealer market for decades. The American Truck Dealers (ATD), after years of fighting the tax alone, recently introduced the Modernize the Truck Fleet (MTF) coalition, a trade association alliance spearheaded by the dealer group to strengthen its fight for the repeal of FET.
The coalition has revolutionized the FET debate, creating a pathway toward resolution for which America’s truck dealers have long searched. But will the dealer market truly be able to rid itself of FET? Those involved believe a repeal is possible but is contingent on two factors: finding an adequate replacement for FET’s revenue stream and ensuring any FET repeal/replacement measures are included within a larger infrastructure bill.
Pull off those tasks and those within the MTF coalition believe the dealer market’s long FET nightmare finally could be over.
The trucking industry has been burdened by FET for more than a century. Introduced as a temporary revenue stream to fund the U.S. military during World War I in 1917, ATD says the tax code supporting FET has been altered and expanded many times.
The most significant change to that tax code came in 1982, when the government shifted the tax to the first retail sale of an asset after decades of being assessed at the wholesale level. This change, which moved the responsibility of collecting the tax from OEMs to their franchisees, transformed FET from a simple pass-through expense for dealers to a complicated mathematical formula coupled with rigorous payment requirements and severe penalties for non-compliance. It’s been that way ever since.
“It’s a difficult tax to administer and its one of those things where if you get it wrong it can be a disaster,” says ATD Chairwoman Jodie Teuton, vice president, Kenworth of Louisiana, who introduced the MTF coalition at the 2019 ATD Convention in January.
