Tap dancers would be proud to shuffle their feet as fast as Congress has shuffled tax provisions from one bill to another. The fancy footwork could leave trucking with new tax breaks, unexpected increases — or nothing.
The first dance, a bill to allow companies to defer big pension contributions, helped some carriers but left others out. Specifically, Congress came to the rescue of single-employer plans just before an April 15 deadline with a temporary relaxation of the contribution rules. But most multi-employer plans gained no relief despite heavy lobbying by unionized trucking and construction companies.
Next on the dance floor is a bill that is more important than it sounds for domestic businesses such as trucking. The bill rewrites tax laws affecting U.S. multinationals and exporters, in response to a World Trade Organization ruling that existing law constituted an illegal export subsidy. When Congress failed to change the offending provisions, the European Union on March 1 imposed tariffs on carefully selected U.S. exports. The tariffs, which started at a 5 % rate, are rising 1 percentage point a month. The volume of complaints is growing, making it increasingly likely that Congress will send the President a bill.
Two aspects make this bill of interest to trucking. First, carriers may benefit from some of the “sweeteners” for domestic companies likely to be added to attract votes.
Second, until the bill passes, the tariffs are likely to cause some businesses to lose sales abroad, which would cut into freight volumes for carriers that supply those firms and their customers. Further, the tariffs apply to some heavy trucks and materials-handling equipment. That could temporarily divert some export-bound vehicles into the domestic market, helping to satisfy the soaring demand for new heavy trucks.
While that dance is going on, Congress is also trying to complete an overdue highway bill, including extension of the fuel and truck excise taxes, before an entire construction season goes by. The bill contains a variety of tax compliance measures that will make it possible to fund more highway spending without explicitly raising these tax rates. One would require payment of the annual heavy-vehicle use tax in one installment instead of four. Another would limit the number of vehicles that qualify as “mobile machinery,” which is exempt from highway taxes.
The shuffle appears when Congress treats the highway and corporate tax bills as “must-pass” legislation that will be sent to the President, no matter what else gets held up. Then all sorts of unrelated provisions get tacked on.
For its part, the Senate shuffled into the corporate tax bill a grab bag of tax breaks and revenue raisers originally included in the energy bill that stalled last fall. Among them: a 5¢/gal. credit for small refiners that produce ultra-low-sulfur diesel fuel, potentially bringing down its cost for truckers.
At least two other proposals that could help many motor carriers are waiting in the wings and hoping to get on the dance card. One provision would extend beyond the end of 2004 the temporary “50% bonus depreciation” that Congress enacted last year. That would benefit any fleet buying equipment next year. Another provision would benefit companies that lost money in 2003 by restoring the three-year carry-back for net operating losses, which expired at the end of 2002.
The bottom line: Expect enactment of one or even two bills with tax provisions that affect you, for better or worse, this session. But you'll have to look sharp to see which provisions get shuffled into the mix and which get left for next year's dance.