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A Big Tax Break for the Trucking Industry Hides in the House Transportation Bill

9:10 AM EST on March 4, 2020

About 40 cars occupy five lanes of highway in crawling traffic that stretches off to the horizon..

Traffic congestion on I-93 southbound in downtown Boston, pictured around 2 pm on Thursday, August 8, 2019.

The new House of Representatives proposal to raise additional revenue for the Commonwealth’s roads, bridges, and transit systems appears to include a multi-million dollar tax break for Massachusetts trucking businesses.

The long-awaited House transportation finance bill, H. 4508, was filed on Feb. 26th after weeks of negotiations behind closed doors. The bill proposes to raise roughly half a billion dollars in additional revenue for transportation projects through a 5-cent gasoline tax increase, a 9-cent increase to diesel fuel taxes, hikes to the Commonwealth's minimum corporate tax rates, and higher fees on app-based ride-hailing services like Uber and Lyft.

But in the middle of the bill lies language that would also grant a significant tax break to commercial trucks and trailers.

Section 11 of the proposed legislation would edit the list of exemptions in the state's sales tax law (Chapter 64H of the Massachusetts General Laws) to add "sales of rolling stock used by common carriers to transport goods in interstate commerce."

An annotated copy of H.4508, the House transportation financing bill. showing the section that would exempt truck sales from the state sales tax.
An annotated copy of H.4508, the House transportation financing bill. showing the section that would exempt truck sales from the state sales tax.

Similar language (in Section 14 of the new bill) would also exempt "storage, use or other consumption of rolling stock, used by common carriers to transport goods in interstate commerce" from the state's 6.25 percent use tax, which applies to equipment purchased out-of-state.

Under current law, the 6.25 percent sales tax on a $150,000 truck purchase would generate $9,375 in revenue for the Commonwealth's Transportation Trust Fund.

Phineas Baxandall, an analyst for the Massachusetts Budget and Policy Center who tipped off StreetsblogMASS about the tax break over the weekend, says that it could cost the Commonwealth $9 to $11 million in lost revenue.

"If the goal of the bill is to add funding for transportation, it’s not clear why this revenue reduction was included," wrote Baxandall in an email message. "This is enough revenue to enable several regional transportation authorities to be fare-free, to make substantial road repairs, or other important functions that should not get shortchanged without strong reasons. It’s not clear what pressing public good is advanced by this.”

In a prepared statement shared with StreetsblogMASS, Kevin Weeks, the executive director of the Trucking Association of Massachusetts, argued that 37 other states already exempt truck sales from their sales taxes, and wrote that "the trucking industry in Massachusetts has been in decline as many trucking companies have gone out of business or moved to other states."

The statement from Weeks also made note of the 9-cent increase to the diesel fuel tax, which will land squarely on his industry, and argued that eliminating the tax on new trucks would give fleet owners an incentive to operate "newer, cleaner, and safer trucks in the Commonwealth."

On Tuesday afternoon and again on Wednesday morning, StreetsblogMASS reached out to Rep. Aaron Michlewitz (D-Boston), the Chair of the House Ways and Means Committee, to inquire about how the tax break came to be included in the legislation. We are still awaiting his response.

Rep. Tami Gouveia (D-Acton) has filed an proposed amendment to the bill that would remove the trucking tax break language.

Lawmakers are expected to debate that and dozens of other possible amendments in this afternoon's formal session of the House of Representatives.

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