A class action lawsuit launched by the Owner-Operator Independent Drivers Association (OOIDA) last week against the New York State Department of Taxation and Finance seeks to head-off what some in the industry are calling “fee proliferation” – efforts by state and local governments to craft extra fees and/or taxes often targeted at truckers to generate additional revenues.
OOIDA said its lawsuit is in response to a $15 fee for a certificate of registration and a $4 decal charge on all trucks using New York State highways, with penalties for non-payment on a timely basis resulting in fines, interest, penalties, and seizure of property.
Jim Johnston, OOIDA’s president and CEO, said in a statement that those fees are being imposed not only on New York-based trucks, but also on trucks based outside of New York. That’s why OOIDA’s lawsuit claims the fees are “unconstitutional and discriminatory” against out-of-state truckers.
“A lot of states imposed fees like this back in the 1980s and 1990s, which were stopped after lawsuits by us and ATA [the American Trucking Associations],” OOIDA spokesperson Norita Taylor told Fleet Owner.
“Now they are coming up again as ways to raise revenue,” she added. “And you have to stop them now before other states try and impose them, because while $15 may not seem like a lot, when you multiply that by potentially 48 states and include potentially other miscellaneous fees, it can really add up on the bottom line.”
A similar impact got dealt to the bottom line of local Nevada truckers last month after Nevada’s Clark County passed a two-year fuel tax increase due to take effect Jan. 1 next year – an effort that should result in a 3-cent per gallon tax hike that’s expected to raise $700 million for transportation projects across Southern Nevada.
Paul Enos, executive director of the Nevada Trucking Association, told Fleet Owner that the problem with such “localized” fuel taxes is that they don’t count towards International Fuel Tax Agreement or “IFTA” calculations – and that leaves carriers both large and small open to “double taxation,” he explained.
He pointed to Nevada’s Washoe County, which implemented a similar “indexed to inflation” fuel tax hike four years ago, to illustrate the effects. That county’s fuel tax hike started at 3 cents per gallon but gradually increased by about 3 cents per gallon every year since – none of it counting towards IFTA calculations.
As an example of how that affects a carrier’s bottom line, Enos said that Washoe County-based carriers pay a local fuel tax of 13.5 cents per gallon, meaning they are shelling out about 40.5 cents per gallon in total state and local fuel taxes, without that extra 13.5 cents counting towards their IFTA payments.
Thus a Washoe County-based carrier actually pays 40.5 cents per gallon in fuel taxes, but if they operate in nearby California, they only get assessed the difference between the California statefuel tax rate of 44.5 cents per gallon and the Nevada state rate of 27 cents per gallon – effectively “double taxation” on the California miles, for instead of just making up only 4 cents per gallon in fuel tax differences between Nevada and California, Washoe County truckers must make up 17.5 cents per gallon.
“On top of all that, the Washoe County fuel tax plan can’t be changed until 2019 until the bonds it’s indexed against come due,” Enos said. “That’s why we got involved in the Clark County fuel tax effort: we wanted to ensure more Nevada trucking companies don’t become competitively disadvantaged due to higher fuel taxes.”
In OOIDA’s case against New York, however, the opposite effect is being fought as out-of-state trucks are facing higher-per-mile taxes and fees versus in-state firms; constituting an undue burden on interstate commerce in violation of the Commerce Clause of the United States Constitution, Article I, Section 8, Clause 3, OOIDA’s Johnston said.
“[Past] cases succeeded in stopping the proliferation of unconstitutional, discriminatory and burdensome taxes in those states,” he added. “Our goal here is to once again put a stop to this type of discriminatory taxation before it spreads to other states.”