AG opines that proposed new truck taxes violate U.S. Constitution

Attorney General Herbert Slatery has opined that proposed legislation to impose new fees on trucks traveling Tennessee highways is unconstitutional because the levies would effectively mean higher taxes on trucks owned by out-of-state companies.

SB354, introduced by Sen. Paul Bailey, R-Sparta, and Rep. Cameron Sexton, R-Cumberland, is entitled the “Public Highway Maintenance Act of 2015. It would impose a new 13-cents-per-gallon “surcharge” on diesel fuel and a “highway maintenance fee” of 2.85 cents per mile traveled within the state for each commercial motor vehicle weighing 60,000 pounds or more.

But Tennessee-based trucking companies would get a credit for payment of the new levies on their state franchise and excise taxes – in many cases, likely enough to reduce the business taxes enough to offset most, if not all, of the new taxes.

In an opinion requested by Senate Transportation Committee Chairman Jim Tracy, R-Shelbyville, Slatery says that arrangement violates both the commerce clause and the equal protection clause of the U.S. Constitution by discriminating against out-of-state companies.

“On its face, SB 354 mandates differential treatment of motor carriers domiciled in Tennessee and those domiciled elsewhere. The proposed act gives motor carriers domiciled in this state a credit against their franchise and excise taxes for the additional surcharges and maintenance fees imposed by the act,” says the opinion.

“This credit is not extended to motor carriers domiciled in other states, although they also are subject to this state’s franchise and excise taxes if they operate in Tennessee. As drafted, therefore, the credit provision of SB 354 violates the dormant Commerce Clause,” it says.

Further, the opinion says, “The credit provisions of SB 354 likewise violate the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution.” It quotes a U.S. Supreme Court decision declaring that a “state may not constitutionally favor its own residents by taxing foreign corporations at a higher rate solely because of their residence.”

The full opinion is HERE